Occidental Outperforms Market after Berkshire Raised Stake

Occidental outpaced the stock market on Monday after Warren Buffet’s Berkshire bought nearly 2.14 million shares from the producer last week.

Story By Jov Onsat |RigZone| Occidental Petroleum Corp. outpaced the stock market in the week’s opening session after billionaire Warren Buffet’s Berkshire Company bought nearly 2.14 million shares from the producer last week.

The USA major closed at $59.21 Monday, up 0.7 percent from the previous session. The S&P 500 index had a gain of only 0.12 percent, the tech-heavy Dow Jones Industrial Average posted 0.03 percent and the NYSE Composite 0.27 percent.

Occidental saw nearly 11.63 million units traded Monday, the highest since last week.

Berkshire Hathaway Inc. has raised its ordinary units in Occidental to 224,129,192 after last week’s three-day purchase of about $122.1 million, according to a filing with the USA Securities and Exchange Commission (SEC) July 27. The Buffet-led investor now owns more than 25 percent of Occidental’s common shares, based on the 891,745,187 shares outstanding the oil company posted in its quarterly filing.

oil pumps, oil and gas minerals ad, rigsOccidental had not gone down below $56 per unit last week. Its highest price from Monday to Wednesday, when Berkshire last bought interests in Occidental, was $57.895.

Berkshire placed $57.02 per share in Wednesday’s purchase transaction, $57.1694 on Tuesday, and $57.0143 in Monday.

Besides the common units, Berkshire also holds 91,964 preferred stocks in Occidental.

But with $712 million in preferred stock payable as of the end of the first quarter, Occidental has triggered its option to repurchase the preferred stake under a deal in which Berkshire committed $10 billion to aid Occidental’s $55-billion acquisition of Anadarko Petroleum Corp in 2019.

Occidental’s available cash stood at $1.218 billion as of March, while its liabilities totaled $7.44 billion. In a court case against Anadarko, Occidental could also assume $1.4 billion in federal taxes, $28 million in state taxes, and $453 million in accrued interest as the former’s debt obligations were transferred to the new owner, according to Occidental’s quarterly report.

Occidental’s momentum in the stock market comes as oil and gas companies have started announcing schedules for the unveiling of their second-quarter results. It will announce its April-June performance on August 2, it said in a media notice Thursday.

“The company is expected to report EPS [earnings per share] of $1.30, down 58.86% from the prior-year quarter”, Zacks said Monday. “Our most recent consensus estimate is calling for quarterly revenue of $7.28 billion, down 32.19% from the year-ago period.

“OXY’s [Occidental] full-year Zacks Consensus Estimates are calling for earnings of $4.84 per share and revenue of $29.84 billion. These results would represent year-over-year changes of -48.24% and -19.57%, respectively.”

Occidental’s net income for the January-March quarter fell nearly four times to $1.263 billion from the corresponding 2022 period as commodity prices dipped. It collected $4.876 billion in net profit January-March 2022 when energy prices soared following Russia’s invasion of Ukraine. Occidental recorded its highest quarterly cash before working capital in that period at over $3.3 billion.

But as oil and gas prices have fallen since peaking around the middle of last year, Occidental’s profit slowed down despite production increasing to 1.22 million barrels of oil equivalent a day (MMboed) from 1.079 MMboed in the 2022 opening quarter.

It has raised its full-year output projection to 1.195 MMboed.

Occidental has declared a $0.18 in dividend per share for common stakeholders for the first quarter of 2023, up five cents from the previous quarter.

The day it announced its first quarter results, May 9, Occidental traded flat at $58.96.

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