Billionaire Warren Buffett, CEO of Berkshire Hathaway (NYSE:BRKa), has dismissed rumors that his company plans to acquire Occidental Petroleum Corp (NYSE:OXY). Although Berkshire has amassed a 23.6% stake in Occidental, Buffett confirmed that there are no plans to make an offer for the company. However, he remains satisfied with his firm’s investment in the oil giant.
Hollub’s Leadership and Debt Reduction
Buffett praised Occidental CEO Vicki Hollub, describing her as an “extraordinary manager”. He cited her efforts in slashing the company’s debt and returning money to shareholders following the acquisition of Anadarko Petroleum Corp (NYSE:APC) in 2019. Buffett also stated that he is happy with Hollub running the company.
Permian Basin Presence
Occidental and Chevron Corp (NYSE:CVX), another significant Berkshire holding, have a considerable presence in the Permian Basin, an area in Texas and New Mexico that accounts for a significant amount of US crude production. This acquisition could have diversified Berkshire’s energy portfolio, which already includes several utilities, electricity distributors, and renewable power projects.
Berkshire’s Investment
Berkshire started amassing shares of Houston-based Occidental in February 2022, which was around the time when Russia invaded Ukraine. The firm owned $10 billion of Occidental preferred stock with an 8% dividend, which helped fund the Anadarko purchase, plus warrants to buy another $5 billion of common shares at $59.62 each. In March, Berkshire ended up owning $21.6 billion of Chevron stock, but it seemed to sell approximately $6 billion in the first quarter.
Conclusion
Buffett’s announcement will put to rest speculation of a potential acquisition of Occidental. With Berkshire holding a significant stake in both Occidental and Chevron, it will be interesting to see how the energy market evolves and how the firm navigates through this landscape. Nevertheless, Buffett remains optimistic about Occidental’s future and satisfied with its current leadership.
