Warren Buffett Gets Green Light To Buy 50% Of Occidental Petroleum

Warren Buffett’s Berkshire Hathaway on Friday (Saturday, Aug. 20, 2022, in Manila) received regulatory approval to purchase up to 50% of oil giant Occidental Petroleum, Yun Li reported for CNBC.

Photo Insert: Berkshire also owns $10 billion of Occidental preferred stock and has warrants to buy another 83.9 million common shares for $5 billion, or $59.62 each.

Shares of Occidental jumped 10% on the news to close at $71.29 apiece, pushing their 2022 gains to more than 145%. On July 11, Berkshire filed an application with the Federal Energy Regulatory Commission (FERC) to buy more of the oil company’s common stock in secondary market transactions.

The conglomerate argued that a maximum 50% stake wouldn’t hurt competition or diminish regulatory authority.

Carlos Clay, acting director of division of electric power regulation, granted the permission Friday, saying authorization was “consistent with the public interest.” The conglomerate has already increased its Occidental stake drastically this year.

Berkshire currently owns 188.5 million shares of Occidental, equal to a 20.2% position. It surpassed a key threshold where Berkshire could record some of the oil company’s earnings with its own, potentially adding billions of dollars in profit.

Berkshire also owns $10 billion of Occidental preferred stock and has warrants to buy another 83.9 million common shares for $5 billion, or $59.62 each. The warrants were obtained as part of the company’s 2019 deal that helped finance Occidental’s purchase of Anadarko.

The stake would rise to nearly 27% if Berkshire exercises those warrants.

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