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Warren Buffett’s Berkshire Hathaway will not be seeking full control of Occidental Petroleum (NYSE:OXY) despite having amassed a stake of over 23%, the Omaha investor said at Berkshire’s annual shareholder meeting this weekend.
Shares in Oxy dropped in pre-market trade in New York on Monday after Buffett rebuffed speculation that he would seek control of the oil company.
“We don’t know where the price of oil will be, but we like Occidental’s position in the Permian,” Buffett told Berkshire Hathaway’s shareholders.
“There’s speculation about us buying control, we’re not going to buy control,” Buffett added.
“We wouldn’t know what to do with it.”
In March, Berkshire Hathaway bought shares in Occidental for the third time during the month, boosting its stake in the company to 23.6%.
Three years ago, Berkshire Hathaway funded Oxy’s takeover of Anadarko with $10 billion in the form of equity. It was as part of this deal that the investment firm received the stock purchase warrants that could see it acquire 20% or more in Occidental.
To date, Berkshire is Oxy’s largest shareholder. Besides the purchase warrants, the company owns $10 billion worth of Oxy preferred stock, which carries an 8% dividend.
Oxy bought Anadarko for $55 billion in 2019, making it one of the biggest M&A deals in energy over the past few years. In that, it outbid Chevron, which had earlier announced a bid for the energy company.
“We will not be making any offer for control of Occidental, but we love the shares we have,” Buffett said at the Berkshire Hathaway annual meeting.
“We may or may not own more in the future but we certainly have warrants on what we got as part of the original deal on a very substantial amount of stock around $59 a share, and warrants last a long time, and I’m glad we have them.”
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.