Equipment used to process carbon dioxide, crude oil and water at an Occidental Petroleum Corp enhanced oil recovery project, in Hobbs, N.M., on May 3, 2017.Ernest Scheyder/Reuters
Warren Buffett’s Berkshire Hathaway Inc BRK-B-N revealed a more than $5-billion stake in Occidental Petroleum Corp OXY-N, as oil prices soared to their highest level in about a decade.
Occidental rose 4.1 per cent to $58.48 in Monday morning trading, after Berkshire disclosed its stake in a Friday night filing with the U.S. Securities and Exchange Commission.
Berkshire said it owns 91.2 million Occidental shares, or nearly 10 per cent of those outstanding, including 61.4 million bought from March 2 to March 4.
Buffett’s Omaha, Nebraska-based company also has warrants to buy another 83.9 million Occidental shares at $59.62 each.
Oil prices have surged higher following Russia’s invasion of Ukraine last month, prompting fears of supply shortages.
Occidental traded below $9 as recently as October 2020.
Berkshire did not immediately respond on Monday to a request for comment.
Buffett had lamented in his Feb. 26 annual shareholder letter that “we find little that excites us” in equity markets.
The billionaire’s company, whose businesses include Geico car insurance and the BNSF railroad, ended December with $146.7-billion of cash and equivalents.
It also invested $350.7-billion in equities such as Apple, Bank of America, American Express and Coca-Cola.
Berkshire did not say whether Buffett or his portfolio managers Todd Combs and Ted Weschler made the latest Occidental investment, though larger investments are normally Buffett’s.
Combs and Weschler recently invested a combined $34-billion.
Berkshire received Occidental warrants in 2019 when it bought $10-billion of preferred stock – which throws off $800-million of annual dividends – to help finance Occidental’s $35.7-billion purchase of Anadarko Petroleum Corp.
The latest investment came as billionaire activist investor Carl Icahn, a critic of the Anadarko merger, last week exited his own Occidental stake.
Berkshire has gone six years without a major acquisition, and has slowed share repurchases following a record $27-billion in 2021.
James Shanahan, an Edward Jones & Co analyst who rates Berkshire “buy,” in a research report said “we are becoming more optimistic about cash deployment” at Berkshire.
He said Berkshire could buy the 8.9 per cent of Berkshire Hathaway Energy it doesn’t already own.
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