Warren Buffett further invests in fossil fuels

Company News

by Glenn Dyer

Warren Buffett's investment in Occidental Petroleum is deepening his involvement in fossil fuels, as reported by US media.

Occidental Petroleum, one of Warren Buffett's favored investments with a nearly 26% stake, is reportedly pursuing additional oil and gas resources from the productive Permian basin in Texas, according to the Wall Street Journal.

The paper suggests that Occidental Petroleum is currently in discussions to acquire CrownRock, a prominent energy producer operating in the western Texas region of the Permian basin. The potential deal could value CrownRock at over $10 billion, including its debt, based on information from sources familiar with the situation.

CrownRock had put itself up for sale back in September.

Considering Occidental's market value of over $53 billion, a takeover of CrownRock would represent approximately 12% of Occidental's market worth, or roughly half the value of Berkshire Hathaway's 25% stake.

It's worth noting that this $10 billion deal is considerably smaller than Occidental's previous $37 billion acquisition of Anadarko a few years ago. To finance the Anadarko deal, Berkshire Hathaway and Buffett provided $10 billion in financing and received unlisted securities in Occidental, which, if exercised, could increase Berkshire's stake to just under 30%.

While Berkshire has regulatory approval to raise its stake in Occidental to 50%, Buffett has expressed that he doesn't intend to go that high.

Additionally, Warren Buffett holds a 5.9% stake, equivalent to 110.25 million shares, in Chevron, which is the second-largest energy company in the United States, following Exxon Mobil.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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