Hillcrest Energy Technologies. (CSE: HEAT)
From concept to commercialization, Hillcrest is investing in the development of energy solutions that will power a more sustainable and electrified future.
Regulatory filings show that from June 5 through this past Monday, Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A, NYSE: BRK.B) has increased its holdings in Occidental Petroleum (NYSE: OXY) over nine consecutive trading days, accumulating a total of 7.3 million shares at around $60 per share.
Following this increase, Berkshire now holds 28.8% of the oil and gas producer’s stock, making it the largest institutional investor in the energy company to date. Occidental Petroleum is now Berkshire’s sixth-largest equity holding, with the top five being Apple, Bank of America, American Express, Coca-Cola, and Chevron.
Additionally, Berkshire holds $10 billion in Occidental preferred shares and warrants to buy 83.9 million shares of common stock at $59.62 per share for $5 billion, potentially increasing Buffett’s stake in Occidental to over 40%. In 2019, Occidental Petroleum acquired Anadarko Petroleum, and Berkshire received the warrants as part of the financing conditions. The stock closed at $60.2 per share on Monday, indicating that Buffett’s warrants are “in-the-money.”
Buffett has previously clarified that he does not intend to fully control the oil company. However, acquisition rumors persist, especially after Berkshire received permission from the U.S. Federal Energy Regulatory Commission in August 2022 to purchase up to 50% of Occidental Petroleum’s shares.
Firstly, there is no doubt that Buffett is optimistic about the long-term development trends of the oil industry. He has stated that due to limited production capacity, oil will become an increasingly scarce investment resource in the future. The late Charlie Munger also believed that oil would become scarce over the next 200 years.
As for why Buffett chose Occidental Petroleum over companies like ExxonMobil, it could be because of his favorable view of Occidental’s CEO Vicki Hollub, praising her management of the company. During a 2022 earnings call, Hollub promised to adhere to financial discipline even if oil prices rise, which greatly impressed Buffett.
Buffett once remarked that he began buying Occidental Petroleum stock after reading the transcript of its earnings call. He said he read the entire text thoroughly, missing not a single word, and was then convinced to buy the stock. Additionally, Occidental is not only one of the biggest producers in the U.S.’s largest oil field, the Permian Basin, but it is also one of the lowest-cost producers, with production costs at just $40 per barrel.
Occidental Petroleum currently has a dividend yield of 1.5%. In early 2022, Buffett seized the opportunity created by market volatility, purchasing 14% of the energy company in just two weeks, valued at over $7 billion. In 2023, the stock price fell by 5%, and this year it has remained stable.
