Warren Buffett’s Berkshire Hathaway on Friday received approval from federal energy regulators to acquire up to 50% of Occidental Petroleum, one of the nation’s largest oil and gas producers.
The Federal Energy Regulatory Commission, in an order approving the partial acquisition, said Berkshire, in its July request, would not “adversely affect” utility bills and harm competition.
Berkshire revealed earlier this month that it already owns more than 20% of Occidental. The Houston-based oil company’s shares have already climbed more than 100% this year, and he’s up another 9% after the FERC announced its orders on Friday.
Berkshire does not own any oil and gas producers, but it already has a large presence in the energy industry. Its Berkshire Hathaway Energy division includes several utilities that serve residential and commercial customers in the Midwest and West, including PacificCorp, MidAmerican Energy and NV Energy.
Buffett and his company have been developing a relationship with Occidental for several years. Occidental raised $10 billion from Berkshire in 2019 by selling preferred shares that pay an 8% dividend in a bidding war with Chevron over Anadarko. Occidental eventually won and bought Anadarko before the pandemic sent energy prices plummeting.
Representatives for Berkshire and Occidental did not respond to requests for comment.
In recent years, many Wall Street investors have been wary of investing in oil, gas, and coal due to growing concerns about climate change. But Buffett has urged activist investors to disclose more information to Berkshire about greenhouse gas emissions resulting from businesses it owns and to spend more money on environmental sustainability. We have long defied conventional wisdom, such as rejection.
Unlike many US oil and gas companies, Occidental has been outspoken about its intentions to be part of the energy transition. The company invested in Carbon Engineering, a company working to remove carbon dioxide from the air. Occidental plans to use this technology to capture carbon and pipe it into oil fields in West Texas to increase fossil fuel production and bury the carbon in the ground.
Occidental is one of the largest producers in America’s most productive oil field, the Permian Basin, which straddles Texas and New Mexico. Announced the most ambitious emissions reduction targets of any major US oil company. The company says it aims to achieve net zero carbon emissions by 2050.
