Berkshire Hathaway Adds Nearly $600M In Occidental Petroleum Stock After Permian Basin Acquisition

Berkshire Hathaway has purchased nearly $600 million worth of stock in Occidental Petroleum this week, according to an SEC filing published on Wednesday evening.

After adding 10.5 million shares this week, the conglomerate owned by investor Warren Buffett (currently the fourth-richest man in the U.S.) now owns 26% of shares in Occidental Petroleum, with a value of around $14 billion at Wednesday's stock price at closing. Berkshire Hathaway first built its stake in Occidental in early 2022, and received regulatory approval to acquire up to 50% of the company later that year.

On Monday, Occidental announced a deal valued at $12 billion to acquire Midland-based oil and gas company CrownRock L.P., expanding the company's footprint in Texas' Permian basin by the equivalent of 170,000 barrels per day in oil production and adding a projected $1 billion in free cash flow by the end of 2024.

Influencing the timing of Berkshire Hathaway's decision to expand its stake, Occidental's stock has dipped in late 2023, registering a 15% decline on the New York Stock Exchange between Sept. 14 ($67.30 per share) and Tuesday, Dec. 12 ($55.55).

Buffett's company views oil and gas as a stable, if not profitable, investment in the medium term. The U.S. Energy Information Administration (EIA) projects a modest increase in the global price of oil through the first half of 2024, which will further boost revenue for oil producers in the Permian basin that have witnessed substantial output growth since the oil shock of the Covid-19 pandemic.

U.S. crude oil output is currently at record levels -- above 13 million barrels per day, by some estimates -- and is expected to add at least 500,000 barrels per day in capacity in 2024, according to the EIA.