Berkshire Buys Nearly 2.57MM More Shares from Occidental

Billionaire Warren Buffett bought almost 2.57 million common stocks from Occidental Petroleum Corp. last week for about $153.3 million.

The purchase, made in three tranches, has increased Berkshire Hathaway Inc’s common shares in the United States energy company to nearly 250.6 million, according to a Berkshire regulatory disclosure. Berkshire now owns nearly 28.3 percent of Occidental common shares, based on Occidental’s latest declared shares outstanding—over 886.6 million units as of April.

Berkshire bought the new shares at an average price of about $59.8 per share. Occidental, listed on the New York Stock Exchange, stayed above $59 per share on closing throughout last week.

Berkshire also holds nearly 85,000 preferred shares in the Houston, Texas-based oil, gas and chemicals producer. Berkshire is the only holder of preferred shares in Occidental.

On May 1 Occidental declared a regular quarterly dividend of $0.22 per share. It paid cash dividends of $332 million in the first quarter of 2024, including $170 million for preferred shares.

Berkshire started investing in Occidental in 2019 with $10 billion paid for preferred shares and common share warrants to aid the latter’s $55-billion acquisition of Anadarko Petroleum Corp. Berkshire began acquiring Occidental common shares in 2022.

Last year Occidental triggered its option to repurchase Berkshire’s preferred stake under the 2019 deal.

“As of March 31, 2024, our investment in Occidental preferred stock had an aggregate liquidation value of approximately $8.5 billion, which reflected mandatory redemptions by Occidental during 2023 of approximately $1.5 billion”, Berkshire said in its latest quarterly filing.

Occidental can also repurchase $1.2 billion worth of common shares remaining under a buyback program authorized 2023.

Occidental reported $718 million in net income for the first quarter, down by $265 million compared to the same three-month period a year ago due to weaker global oil prices and lower domestic petroleum volumes.

Despite the fall, which becomes steeper by prior-quarter comparison, Occidental beat the Zacks Consensus Estimate of earnings per share by 16.1 percent, helped by lower lease operating costs in the U.S.

However, first quarter 2024 earnings included a special net gain of $114 million from litigation settlements.

Occidental averaged 1.2 million barrels of oil equivalent per day in production in the January–March quarter, about the same as the opening quarter of 2023 and the previous quarter and at the midpoint of guidance despite an “extended third-party outage in the eastern Gulf of Mexico”, Occidental said.

Occidental ended the quarter with $8.3 billion in current assets—assets convertible to cash within a year—including $1.3 billion in cash and cash equivalents. Meanwhile, it owed $8.8 billion in current liabilities including $1.2 billion in current maturities as of end-March. Occidental held $720 million in quarterly free cash flow before working capital.


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