Is Warren Buffett Drilling For Oil?

○ His growing stake in shale producer Occidental has investors wondering whether it will be Berkshire Hathaway’s next acquisition

- Katherine Chiglinsky and Kevin Crowley

After helping Occidental Petroleum Corp. win a bidding war for Anadarko Petroleum by purchasing $10 billion of Oxy’s preferred stock in 2019 and then quietly buying up a sizable stake in regular shares during the following months, Warren Buffett’s Berkshire Hathaway Inc. suddenly disappeared from the common stock in 2020, giving no reason for the investor’s about-face.

Now, Buffett is once again on the Occidental bandwagon—and with more momentum than ever. Just as billionaire investor Carl Icahn exited his own stake in Occidental, Berkshire disclosed in a regulatory filing in March a rekindled interest that’s led to a buying spree. In just a few weeks, Berkshire stacked up an investment worth about $7.7 billion on top of its preferred stock holding, making it the biggest shareholder at Occidental and landing the shale producer among the conglomerate’s top 10 equity bets.

That renewed enthusiasm from Buffett, who’s flush with near-record levels of cash and hungry for deals, has some investors wondering if he’s considering an outright bid for Occidental. It would probably cost him more than $50 billion, which would rank as his biggest deal ever. Buffett has never fully owned an oil company, raising questions about just how far the billionaire investor wants to wade into the volatile world of oil markets. But with Occidental becoming a more attractive target as it transformed from a struggling oil producer into the S&P 500’s best-performing stock this year, shareholders speculate it could be the “elephant-sized” deal Buffett’s been scouting for years.