Update On Buffett - OXY -- August 21, 2022

For background, see this post.

Now, the most recent update from The WSJ.  

The WSJ articles alidates / corroborates my thoughts, as previously posted, but also provides insight into the additional reasons why Buffett sought permission for 50% ownership.  

From the article:

• Analysts have said Occidental’s oil business would complement Berkshire’s existing energy holdings, which include utilities, natural gas and renewables. 
• Mr. Buffett has a warm relationship with Chief Executive Vicki Hollub and has publicly praised her efforts to turn the company around after its acquisition of Anadarko Petroleum Corp. and her plans to pay down debt and increase dividend payouts.
• But Mr. Buffett hasn’t informed Occidental of any plans to acquire a controlling stake in the company, according to people close to the matter. 
• Given Mr. Buffett’s well-known aversion to hostile deal making, it would be out of character for him to make a bid without sounding out the company’s executives and directors first.
• Holdings in OXY:
• Filings show Berkshire currently has a 20% stake in Occidental. It also has warrants to purchase another 83.9 million common shares and 100,000 shares of preferred stock that pay a hefty dividend—both of which it acquired after helping Occidental finance its 2019 acquisition of Anadarko.
• Outstanding OXY shares: 931.49 million, currently. 
• Occidental Petroleum 2021 shares outstanding were 0.959B, a 4.36% increase from 2020.
• Occidental Petroleum 2020 shares outstanding were 0.919B, a 13.49% increase from 2019.
• Occidental Petroleum 2019 shares outstanding were 0.81B, a 6.05% increase from 2018.
  
• If Berkshire were to exercise the warrants, its stake would rise to roughly 27%. That would have exceeded the 25% limit FERC allowed for before Friday’s ruling. 
• Taxes could also play a role in Mr. Buffett’s bid for a bigger minority stake in Occidental. Corporations with a stake of at least 20% in another company are eligible to deduct 65% of dividends received, up from the standard 50%. 
• Berkshire’s 20% stake also allows it to include a proportionate share of Occidental’s earnings in its own results. That could give its earnings a multibillion-dollar boost annually, based on analyst estimates of Occidental’s earnings. Before the most recent purchases, disclosed this month, Occidental fell below the 20% threshold for both benefits. 
• Since Berkshire started buying Occidental shares in February, 2022, Mr. Buffett has had a friendly and collaborative relationship with Ms. Hollub, and the pair speak regularly, according to people familiar with the matter. When Mr. Buffett bought another slug of Occidental shares this spring, he called Ms. Hollub to let her know about the transaction, according to one of the people. Ms. Hollub was driving at the time and pulled over to take the call, the person said.