Warren Buffett says Berkshire has no plans to buy Occidental Petroleum

Finance


Jonathan Stempel and Carolina Mandle

OMAHA, Nebraska (Reuters) – Warren Buffett said on Saturday that Berkshire Hathaway has no plans to buy Occidental Petroleum but is happy with the company’s large investment in the company. .

At Berkshire’s annual shareholder meeting, Buffett dismissed speculation that Berkshire would buy Occidental after owning a 23.6% stake.

“We are not making any offers to Occidental,” Buffett said.

Occidental did not immediately respond to a request for comment.

Analysts and investors say the deal could diversify Berkshire’s energy portfolio.

In February 2022, when Russia invaded Ukraine, Berkshire began collecting stakes in Houston-based Occidental.

Buffett has also maintained a close relationship with Occidental CEO Vicky Holb, who has reduced debt and returned money to shareholders since the company acquired Anadarko Petroleum Corporation in 2019.

“Horab is an extraordinary executive at Occidental,” Buffett said. “We love Vicky doing it.”

Another large holding of Occidental and Berkshire, Chevron Corporation, also has a significant presence in the Permian Basin, a region of Texas and New Mexico that accounts for a significant portion of U.S. crude oil production. .

Berkshire, which held $21.6 billion in Chevron shares at the end of March, appeared to have sold about $6 billion in the first quarter, estimates Edward Jones & Co. analyst Jim Shanahan. are doing.

Until recently, Berkshire owned $10 billion of Occidental preferred stock with an 8% dividend, which funded the Anadarko acquisition, and had warrants to purchase an additional $5 billion of common stock at $59.62 a share.

Berkshire said Saturday that Occidental has redeemed about $474 million of preferred stock at a premium.

Last August, Berkshire received approval from the US Federal Energy Regulatory Commission to purchase up to 50% of Occidental’s common stock.

Exercising the warrant required approval because it exceeded the Federal Energy Regulatory Commission’s 25% ownership limit.

Buffett, 92, is desperate for another big acquisition of the Omaha, Nebraska-based conglomerate, which has dozens of businesses, including Geico Auto Insurance and BNSF Railroad.

Berkshire held a 22.6% stake in BNSF before paying the remaining $26.5 billion in 2010.

(Reporting by Jonathan Stempel, Omaha, Nebraska, and Carolina Mandle, New York)



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