Billionaire investor Warren Buffett remains bullish on energy companies as his investment conglomerate Berkshire Hathaway (BRK.A) recently increased its stake in Occidental Petroleum to 25 percent, currently worth over $13.5 billion. Berkshire now owns 224.1 million shares of Houston-based oil producer, one of the largest in the U.S., after buying 2.1 million shares between June 26 and June 28, according to a U.S. Securities and Exchange Commission filing on June 28. Berkshire purchased another 4.66 million Occidental shares on May 30. Despite his growing ownership in Occidental, Buffett said his goal is not to seek 100 percent control of the energy company.
“There’s speculation about us buying control,” Buffett said during Berkshire Hathaway’s annual shareholder meeting in May. “We’re not going to buy control. We wouldn’t know what to do with it.”
Last August Berkshire received regulatory approval to buy up to 50 percent of Occidental from the Federal Energy Regulatory Commission after arguing it would not impact competition. The recent shares of Occidental were purchased at just over $57 a share. Occidental shares are up 5 percent in the past month but are still down 1.6 percent year-to-date. Occidental CEO Vicki Hollub has received praise from Buffett for leading an enterprising carbon capture strategy to lower emissions. Buffett also assisted in financing Occidental’s $59 billion acquisition of Anadarko Petroleum in 2019, beating out a bid from rival buyer Chevron. Hollub has been focusing on generating cash flow from its newer shale assets that came with the Anadarko acquisition.
Berkshire also owns about 84 million warrants that allow the firm to buy Occidental’s common stock at $59.62 each. As many companies and investors are avoiding traditional oil and gas companies and investing in renewables, Buffett remains a staunch supporter of energy companies. And Berkshire’s energy holdings are not just in oil and gas companies.
Earlier in July, Berkshire Hathaway Energy, the utility and energy division of Berkshire Hathaway, bought a 50 percent stake in the Cove Point liquefied natural gas facility in Maryland for $3.3 billion from Dominion Energy, an East Coast utility. The Berkshire division, which is 92 percent owned by Berkshire, now has a 75% stake in the plant, making it one of the largest electric utilities companies in the U.S. Back in 2020, Buffett bought the initial stake for $4 billion. Buffett is betting on the energy sector, including infrastructure such as the plant and still owns a large stake in Chevron even after selling roughly $6 billion worth of Chevron stock during the first quarter.
Berkshire started buying Chevron stock in early 2020. At the peak, Berkshire owned 167 million Chevron shares valued at $29 billion. Buffett sold shares during the first and second quarters of 2021. But when crude oil prices surged after Ukraine was invaded by Russia in 2022, Buffett began buying Chevron shares again during the first three quarters of 2022. He then divested 2.3 million shares in the fourth quarter and sold another 30.5 million shares in the first quarter of 2023. Berkshire still owns 132.4 million shares of Chevron, which are up by 0.82 percent as of July 19.
Berkshire Hathaway is valued at $755 billion. Its Class A shares were slightly up by 0.24 percent on July 18.
