Warren Buffett’s Berkshire Hathaway bought more Occidental Petroleum stock amid an ongoing slide in oil prices.
Buffett purchased $275 million worth of Occidental over the past week, boosting Berkshire’s stake in the oil producer to 24.9%.
Despite the string of buys, Buffett has said that Berkshire has no plans to take over Occidental.
Berkshire purchased 4.66 million shares of the Houston-based oil producer for about $275 million. The purchases took place between May 25 and May 30 at a weighted average price of about $58.57 per share. Occidental Petroleum stock fell 1.4% on Wednesday to $57.79.
The latest stock buys increased Berkshire Hathaway’s total stake in Occidental Petroleum to about 222 million shares, or about 24.9% of the entire company. Berkshire also owns nearly $10 billion of the company’s preferred stock, as well as warrants that give it the right to buy $5 billion worth of stock at a fixed price.
Buffett probably isn’t done building his stake in the company, given that Berkshire Hathaway has received the green light from regulators to own up to 50% of the company.
Despite the large and growing stake in Occidental Petroleum, Buffett said at Berkshire Hathaway’s most recent annual shareholder meeting that he has no intention of taking over the company.
“We will not be making any offer for control of Occidental,” he said.
Even with the recent decline in oil prices, with WTI crude falling 14% year to date to just under $70 per barrel, Buffett likely sees value in Occidental Petroleum’s low break-even oil price of about $40 per barrel.
That gives Occidental plenty of breathing room in terms of making profits on its drilling and exploration, even if oil prices continue to slide due to Russia flooding the markets with its cheap crude and a slower-than-expected economic rebound in China.
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