Billionaire Warren Buffet Soon to Acquire 50 Percent Shares of Occidental


US energy sector regulators on Friday (08/19/2022) gave Berkshire Hathaway Inc, a company controlled by billionaire Warren Buffett, permission to buy up to 50 percent of the common stock of oil company Occidental Petroleum Corp.

As reported by Reuters, Saturday (20/8/2022), Occidental’s share price then jumped 9.9 percent, and closed up 6.41 US dollars to 71.29 US dollars, after the Federal Energy Regulatory Commission (FERC) said it let Berkshire add 20.2 percent of its shares as long as it is consistent with the public interest.

Berkshire had filed to increase its holdings on July 11, 2022, saying it would not hurt competition, weaken regulatory authorities or increase costs for consumers. FERC regulates the interstate transmission of electricity, natural gas and oil.

Houston-based Occidental’s share price has more than doubled this year, benefiting from rising oil prices following Russia’s February 24 invasion of Ukraine. Berkshire started buying Occidental shares four days later

Buffett’s Omaha, Nebraska-based conglomerate also owns a $10 billion stake in Occidental, which helped finance the 2019 purchase of Anadarko Petroleum Corp and has warrants to buy another 83.9 million common shares for $5 billion.

Berkshire also ended June with a $23.7 billion stake in the larger oil company, Chevron Corp.

“Buffett is taking advantage of stock market participants who are ignorant about the oil and gas industry and think of it as a dead business. Buffett thinks it can make him rich,” said Cole Smead, president of Smead Capital Management Inc. in Phoenix, which owns shares of Occidental and Berkshire.

Berkshire did not immediately respond to a request for comment sent to Buffett’s assistant.

Occidental spokesman Eric Moses said a higher ownership limit was needed because the company owns assets that are subject to FERC regulations. It is known that the previous limit was 25 percent.

The FERC authorization does not require Berkshire to purchase Occidental stock. Some investors and analysts remain saying Berkshire could eventually buy Occidental, diversifying its energy portfolio that includes several utilities, power distributors and renewable power projects including wind.

Buffett completed one of his biggest acquisitions, the $26.5 billion purchase of railroad BNSF in 2010 after Berkshire raised a 22.6 percent stake.

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