Warren Buffett's Berkshire Hathaway ups share of Occidental Petroleum to nearly 20% - Energy News, Top Headlines, Commentaries, Features & Events

Conglomerate makes new US$698-million share purchase stirring speculation it is seeking 100% stake in oil producer

Reuters

Warren Buffett’s Berkshire Hathaway Inc said on Thursday it bought another 12 million shares of Occidental Petroleum Corp. this week, giving it an 18.7 per cent stake in the oil company.

The purchases were made on Tuesday and Wednesday and cost about US$698 million, Berkshire said in a U.S. Securities and Exchange Commission filing.Buffett’s company had also purchased 9.9 million Occidental shares last week.It is by far the largest shareholder of Houston-based Occidental, owning 175.4 million shares worth US$10.8 billion.

Berkshire also owns US$10 billion of Occidental preferred stock, and has warrants to buy another 83.9 million common shares for US$5 billion, or US$59.62 each. That is slightly below the shares’ Thursday closing price of US$61.47.

Occidental’s share price has more than doubled this year, helped by Berkshire’s purchases as well as rising oil prices following Russia’s invasion of Ukraine.

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Berkshire’s growing stake has prompted market speculation that Buffett’s company might eventually buy all of Occidental.If the stake reached 20 per cent, Berkshire could consider an accounting change that would let it record its proportionate share of Occidental’s earnings with its own results.Berkshire uses the equity method of accounting for its 26.6 per cent stake in Kraft Heinz Co, the packaged food company.

Buffett’s Omaha, Neb.-based conglomerate owns dozens of businesses including the BNSF railroad, Geico car insurer and its namesake energy business, as well as stocks including Apple Inc. and Bank of America Corp.

Occidental has been reducing debt since purchasing Anadarko Petroleum Corp. for US$35.7 billion in 2019. Berkshire’s preferred stock investment helped finance that takeover.

Berkshire’s share price has fallen seven per cent this year, compared with an 18 per cent decline in the Standard & Poor’s 500.