Warren Buffett’s company has bet $47B on oil sector

OMAHA, NEB. » Warren Buffett’s company has bought up more than $11 billion worth of Occidental Petroleum stock this year, giving Berkshire Hathaway control of more than 20% of the oil producer.

Occidental’s stock rose more than 3.5% on Tuesday to over $62 after Buffett revealed purchases of nearly 6.7 million shares worth more than $400 million.

Wall Street follows Buffett’s

actions closely, including his investments in Occidental Petroleum. Its shares have more than doubled in price this year.

Berkshire has repeatedly acquired shares of the Houston driller whenever the stock falls below $60 in recent months. Buffett also dropped more than $20 billion on Chevron stock in the first quarter of this year and took advantage of the surge in oil prices after Russia invaded Ukraine. Berkshire’s Chevron stake is worth more than $24 billion.

Buffett’s Omaha, Nebraska, conglomerate holds nearly $47 billion in oil sector investments because Berkshire holds another $10 billion worth of preferred Occidental shares that it picked up in 2019 when it helped finance Occidental’s purchase of Anadarko.

And Buffett may not be done. Berkshire owns warrants to buy another 83.9 million Occidental shares at $59.62 apiece. Edward Jones analyst Jim Shanahan estimates that Berkshire’s

oil sector holdings are worth $46.6 billion today even without the value of those warrants.

Because Berkshire now owns 20.2% of Occidental’s stock, it will be allowed to record a proportional share of the oil producer’s earnings on its earnings reports. That could provide a roughly $2 billion a year boost to Berkshire’s bottom line.

Buffett aggressively invested in stocks this year with the market weighed down by soaring inflation and rising interest rates.