Amidst ongoing discussions about his involvement in fossil fuels, Warren Buffett’s recent move indicates a deepening commitment to the industry. Occidental Petroleum, a top investment choice for Buffett with a nearly 26% stake, is reportedly looking to expand its oil and gas resources in the productive Permian basin of Texas.
According to sources familiar with the situation, Occidental Petroleum is in talks to acquire CrownRock, a prominent energy producer operating in the western Texas region of the Permian basin. The potential deal, which includes the assumption of debt, could value CrownRock at over $10 billion.
While this acquisition represents around 12% of Occidental’s market worth, it is significantly smaller in scale compared to their previous $37 billion purchase of Anadarko. To finance the Anadarko deal, Berkshire Hathaway, Buffett’s investment firm, provided $10 billion in financing and acquired unlisted securities in Occidental.
Buffett’s investment in the fossil fuel industry expands beyond Occidental Petroleum. He also holds a 5.9% stake, equivalent to 110.25 million shares, in Chevron, the second-largest energy company in the United States after Exxon Mobil.
It is important to note that despite regulatory approval allowing Berkshire Hathaway to increase its stake in Occidental to 50%, Buffett has stated that he does not intend to go that high. This indicates that while he sees value in the industry, he remains cautious about overexposure.
Warren Buffett’s investment decisions reflect his belief in the long-term viability of the fossil fuel industry. As an experienced investor, he recognizes the importance of adapting investment strategies to changing market conditions while maintaining a diverse portfolio.
Q: What is the Permian basin?
A: The Permian basin is a large oil-rich region located primarily in Texas and parts of New Mexico. It is one of the most productive oil and gas basins in the United States.
Q: What is a stake?
A: A stake refers to the ownership interest an individual or organization holds in a company, typically represented by shares.
Q: What is Berkshire Hathaway?
A: Berkshire Hathaway is a multinational conglomerate and investment firm led by Warren Buffett. It owns shares in various companies and operates businesses in sectors such as insurance, utilities, and manufacturing.