© Reuters. FILE PHOTO: The Occidental Petroleum Corporation logo is displayed on a screen on the floor at the New York Stock Exchange (NYSE) in New York, US, April 30, 2019. REUTERS/Brendan McDiarmid
Written by Jonathan Stempel and Carolina Mandel
OMAHA, Nebraska (Reuters) – Warren Buffett said on Saturday that Berkshire Hathaway (NYSE: Inc) has no plans to acquire Occidental Petroleum Corp (NYSE) but remains pleased with its large investment in the oil company.
Speaking at Berkshire’s annual meeting of shareholders, Buffett dismissed speculation that Berkshire would buy Occidental after it had accumulated a 23.6% stake.
“We will not make an offer for Occidental,” Buffett said. “We have the right management.”
Occidental did not immediately respond to a request for comment.
Analysts and investors said the acquisition could diversify Berkshire’s energy portfolio, which includes several utilities, electricity distributors and renewable energy projects.
Berkshire began collecting shares of Occidental in Houston in February 2022, when Russia invaded Ukraine.
Buffett also has a close relationship with Occidental CEO Vicky Hollub, who has been reducing debt and returning money to shareholders since the company bought Anadarko Petroleum Corp (NYSE:) in 2019.
“Holub is an exceptional director at Occidental,” Buffett said. “We’d love for Vicky to turn it on.”
Occidental f chevron Corp (NYSE: ), another large Berkshire company, has a significant presence in the Permian Basin, an area of Texas and New Mexico that accounts for a significant amount of production.
Jim Shanahan, an analyst at Edward Jones & Co., estimated that Berkshire ended March with $21.6 billion in Chevron stock, even though it sold about $6 billion in the first quarter.
Until recently, Berkshire also owned $10 billion in preferred stock in Occidental with an 8% dividend, which helped fund the Anadarko purchase, as well as warrants to buy another $5 billion in common stock at $59.62 per share.
Berkshire said on Saturday that Occidental had exchanged about $474 million of preferred stock for a premium, which it was entitled to do, reducing the dividend.
Last August, Berkshire won permission from the US Federal Energy Regulatory Commission to buy up to 50% of Occidental’s common stock.
She needed the authorization because she would have exceeded the FERC’s 25% ownership limit had she exercised the safeguards.
Buffett, 92, is eyeing another big acquisition at his Omaha, Nebraska conglomerate, whose dozens of businesses include auto insurance company Geico and railroad BNSF.
Berkshire held a 22.6% stake in BNSF before paying $26.5 billion for the remainder in 2010.