Buffett: Berkshire won’t buy Occidental Petroleum.

Berkshire Hathaway Not Planning to Acquire Occidental Petroleum, Says Warren Buffett

Warren Buffett, the CEO of Berkshire Hathaway, has confirmed that the company has no plans to acquire Occidental Petroleum Corp, despite having accumulated a 23.6% stake in the oil company. Speaking at Berkshire’s annual shareholder meeting, Buffett rejected speculation that the company would make an offer for Occidental, stating that they are happy with the current management.

Why Berkshire Hathaway is Happy with Occidental Petroleum

Berkshire Hathaway started amassing shares of Houston-based Occidental in February 2022, around the time of Russia’s invasion of Ukraine. Analysts and investors have suggested that an acquisition could diversify Berkshire’s energy portfolio, which includes several utilities, electricity distributors, and renewable power projects. However, Buffett has praised Occidental CEO Vicki Hollub, who has been slashing debt and returning money to shareholders since the company bought Anadarko Petroleum Corp in 2019.

“Hollub is an extraordinary manager at Occidental,” Buffett said. “We love having Vicki run it.”

Occidental and Chevron Corp, another large Berkshire holding, also have significant presences in the Permian Basin, an area in Texas and New Mexico that accounts for a significant amount of U.S. crude production. Berkshire ended March owning $21.6 billion of Chevron stock, though it appeared to sell about $6 billion in the first quarter, according to Edward Jones & Co analyst Jim Shanahan’s estimates.

Berkshire Hathaway’s Relationship with Occidental Petroleum

Until recently, Berkshire also 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. Berkshire said on Saturday that Occidental redeemed about $474 million of the preferred stock at a premium, which it had a right to do, reducing dividend payouts. Last August, Berkshire won U.S. Federal Energy Regulatory Commission permission to buy up to 50% of Occidental’s common stock. It needed the authorization because it would have exceeded the Federal Energy Regulatory Commission’s 25% ownership limit had it exercised the warrants.

Buffett, 92, has longed for another large acquisition for his Omaha, Nebraska-based conglomerate, whose dozens of businesses include Geico car insurance and the BNSF railroad. Berkshire had a 22.6% stake in BNSF before paying $26.5 billion for the remainder in 2010.

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