Berkshire Hathaway, led by Warren Buffett, has increased its stake in Occidental Petroleum, purchasing approximately 10.5 million shares for a total of about $590 million from Monday to Wednesday this week, as per a document filed with the U.S. Securities and Exchange Commission (SEC) on Wednesday evening.
Berkshire now owns 27% of Occidental Petroleum, valued at around $14 billion, making the oil company the sixth-largest holding in Berkshire Hathaway's portfolio. Occidental Petroleum's current market value is about $50 billion. Previously, Buffett had ruled out the possibility of gaining full control of this energy company.
Additionally, Berkshire Hathaway holds warrants to buy an extra 83.8 million shares of Occidental Petroleum at $56.62 per share.
This latest acquisition by Berkshire Hathaway coincides with Occidental Petroleum's announcement of its $12 billion acquisition of CrownRock. On Monday, Occidental Petroleum declared it had reached an agreement to acquire CrownRock in a deal valued at approximately $10.8 billion in cash and stock, along with assuming CrownRock's $1.2 billion debt.
While Berkshire Hathaway did not provide financial assistance to Occidental Petroleum as it did during the 2019 acquisition of Anadarko, its recent buying spree undoubtedly signifies strong support for the deal, highlighting its confidence even as Occidental Petroleum takes on more debt for the acquisition.
During the preparation phase of the deal, Occidental Petroleum's corporate jet flew from its headquarters in Houston to Buffett's hometown of Omaha on November 27, staying on the ground for about three hours. Flight data revealed that this was Occidental Petroleum's plane's second visit to Omaha in November, with no visits since May.
The North American shale oil industry is increasingly mature and experiencing slower growth, with many of the best shale oil sites already developed. Oil companies are eagerly acquiring competitors to secure new drilling sites. Occidental Petroleum's acquisition of CrownRock significantly expands its resources in the productive Permian Basin.
Berkshire Hathaway's previous purchase of Occidental Petroleum shares was in late October this year, acquiring about 3.92 million shares at an average price of $62.83, which is notably higher than Berkshire's average purchase price for Occidental Petroleum.
Morgan Stanley recently upgraded Occidental Petroleum from "hold" to "overweight," setting a target price of $68.
Shares of Occidental Petroleum rose over 3% in Thursday's trading, briefly surpassing $59.6.
