A bull on energy prices, Berkshire Hathaway's CEO Warren Buffett plans to increase its stake in oil producer Occidental Petroleum (OXY) to 50%.
Shares of Occidental rose by 10.5% to $70.80 on news that Buffett plans to massively increase its stake. Berkshire received permission from the Federal Energy Regulatory Commission.
The conglomerate filed an application on July 11 with FERC, the regulatory arm for the energy industry, to acquire more shares in secondary market transactions. The conglomerate said that owning a 50% stake would not impact competition.
Permission was granted on Aug. 19, stating that authorization was “consistent with the public interest” said Carlos Clay, acting director of division of electric power regulation.
Berkshire Hathaway (BRK.A) bulked up its holding of Occidental during the second quarter and holds 188 million shares, a 20% stake in the energy company. The company purchased 22 million more shares of Occidental Petroleum and owned 158.5 million shares as of June 30, according to a U.S. Securities and Exchange Commission filing on Aug. 15.
The company also increased its holding of Chevron (CVX) by adding 2.4 million more shares, bringing the total to 161.4 million shares and also
During the second quarter Berkshire Hathaway spent $6 billion on stocks, compared to the $51 billion it allocated for stocks during the first quarter.
Energy companies have outperformed during the first half of 2022 as oil prices rose sharply, first on a recovery in the U.S. economy and then after Russia invaded Ukraine. However, in recent months oil prices have fallen back some, largely on fears major economies are headed for significant slowdowns, particularly in Europe and the United States. Recent weak economic data from China, and ongoing covid shutdowns there are also adding to fears of a global downturn.