Andrew Bary

Berkshire Hathaway owns 28% of Occidental Petroleum and CEO Warren Buffett has said that Berkshire isn't interested in buying the entire company.

That apparently hasn't stopped Occidental CEO Vicki Hollub from wishing that Berkshire would purchase the energy company. In a Forbes article published Tuesday, Hollub is quoted as saying a Berkshire buyout "would be a dream come true."

That comment could reignite speculation about a Berkshire deal for the remaining 72% of Occidental. Stock in Occidental, like that of other energy companies, is down sharply this year.

Buffett could be asked about whether his view on buying Occidental has changed since 2023 at Berkshire's annual meeting on Saturday in Omaha. At the annual meeting that year, Buffett addressed speculation that Berkshire might take over Occidental.

"But it's, well, it's an interesting subject, I'll put it that way, and we will not be making any offer for control of Occidental, but we love the shares we have," he said.

The freedom that Berkshire's ownership would provide could be appealing to Hollub. She wouldn't have to deal with Wall Street and institutional investors, allowing her to focus entirely on the business.

But it is unusual for public-company CEOs to state publicly that they would prefer being privately held. Many CEOs relish corporate independence and aren't eager to sell when their stock prices are weak.

Occidental stock, which fell 0.4% to $40.35 Tuesday, was off 2.7% to $39.27 in early trading Wednesday. The shares are down 20% so far this year and are way below their 52-week high of $68 set a year ago.

Berkshire certainly has the wherewithal to buy the remaining 72% of Occidental. If Berkshire were to pay $60 a share, a generous premium of about 50%, that would cost $40 billion. Berkshire was sitting on more than $300 billion of cash at the end of 2024.

Occidental common stock hasn't been a good investment for Berkshire, as Barron's has noted. We estimate that Berkshire's cost basis is in the low $50s per share, based largely on purchases Berkshire has disclosed since it began accumulating the stock in 2022.

Berkshire also owns about $8.5 billion of 8% Occidental preferred stock and has warrants to buy 84 million shares of common stock at around $60 a share.

Occidental stock has done poorly since Berkshire bought the preferred shares in 2019. The stock is down by about a third since then and is trailing behind many peers.

Occidental stock has been depressed this year by weakness in oil prices. Benchmark U.S. crude dipped below $60 a barrel Wednesday and is down from more than $70 a barrel at the start of 2025.

Occidental is considerably more leveraged than its peers. That is a legacy of its roughly $55 billion purchase of Anadarko Petroleum in 2019 and its $12 billion deal for the privately held Crown Rock in 2024. Both transactions were mainly financed with debt,

The company ended 2024 with about $25 billion in long-term debt and has put stock buybacks on hold until it brings down its leverage. Investors favor energy companies with strong balance sheets, particularly when oil prices are weak.

Berkshire's last purchase of Occidental stock came in early February when it bought 763,000 shares for about $47 each, bringing its stake to 265 million shares now worth around $11 billion. Buffett hasn't nibbled even though the stock is under $40, indicating that he may not view it as cheap.

For now, it looks like Hollub's wish may only be a dream.

Write to Andrew Bary at andrew.bary@barrons.com

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April 30, 2025 11:30 ET (15:30 GMT)

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