Berkshire Hathaway cleared to buy up to 50% of Occidental Petroleum.

Source: By Clifford Krauss, New York Times • Posted: Monday, August 22, 2022

The Federal Energy Regulatory Commission approved a request from Warren Buffett’s company to take a bigger stake in the oil company.

The Federal Energy Regulatory Commission said in its order authorizing the partial acquisition that Berkshire said in its July request that the share purchase “would not have an adverse effect” on utility rates and would not hurt competition.

This month, Berkshire disclosed that it had already accumulated more than 20 percent of Occidental’s shares. Shares of the oil company, which is based in Houston, had already risen more than 100 percent this year and climbed an additional 9 percent after the commission released its order on Friday.

Eric Moses, a spokesman for Occidental, said the commission’s approval was needed because the oil company owns assets regulated by the commission. He declined to comment on Occidental’s and Berkshire’s plans and discussions.

A representative of Berkshire did not respond to a request for comment.

Berkshire already has a big presence in the energy industry, though it doesn’t own an oil and gas producer. Its Berkshire Hathaway Energy division includes several utilities like PacifiCorp, MidAmerican Energy and NV Energy that serve residential and business customers in the Midwest and West.

Mr. Buffett and his company have been deepening ties to Occidental for several years. During Occidental’s bidding war with Chevron for Anadarko in 2019, Occidental raised $10 billion from Berkshire by selling it preferred stock that pays an 8 percent dividend. Occidental ultimately prevailed and acquired Anadarko before the pandemic sent energy prices tumbling.

Many investors on Wall Street have grown wary of investing in oil, gas and coal in recent years because of growing concerns about climate change. But Mr. Buffett has long bucked conventional wisdom, including rebuffing activist investors who want him to disclose more information about the greenhouse gas emissions attributable to the businesses owned by Berkshire, and to spend more money on environmental sustainability.

Unlike many U.S. oil and gas companies, Occidental has been outspoken about its intention to be part of an energy transition. It has invested in a company, Carbon Engineering, that is working on taking carbon dioxide out of the air. Occidental plans to use the technology to capture carbon, pipe it into oil fields in West Texas to increase fossil fuel production and leave the carbon buried in the ground.

Occidental is one of the biggest producers in the Permian basin, the most productive American oil field, which straddles Texas and New Mexico. It has announced the most ambitious emissions reduction targets among large U.S. oil companies. The company has said it aims to reach net-zero carbon emissions by 2050.