Berkshire Hathaway is one step closer to reaching a threshold that would allow it to include Occidental Petroleum in its results
Some analysts believe Berkshire may go even further.
Beyond simply buying more shares, Berkshire has another way it can swiftly boost its stake: exercising its warrants. Berkshire acquired warrants to buy an additional 83.9 million shares of Occidental at $59.62 apiece when itto help fund its acquisition of Anadarko Petroleum. Although Occidental shares are trading below $59.62, they closed above the mark as recently as Friday.
There’s a good chance that Berkshire might try to acquire the rest of Occidental if and when the company’s credit rating improves, Neal Dingmann, analyst at Truist Securities, wrote in a June research note.What is your outlook on Berkshire Hathaway’s bet on big oil? Join the conversation below. Berkshire typically owns only investment-grade companies, and Occidental’s credit rating is just below that level. But it will likely improve within the year, given how much it has been focusing on paying down debt and freeing up cash flow, Mr. Dingmann added., Mr. Dingmann said. Berkshire Hathaway Energy Co. owns utilities, natural-gas companies, and solar and wind power businesses, but nothing focused on oil itself.Mr. Buffett has spoken favorably about the U.S.
“We should be very happy that we can produce 11 million barrels a day, or something of the sort, in the United States, rather than being able to produce none and having to find 11 million barrels a day somewhere else in the world to take care of keeping the American industrial machine working,” he said.
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