Warren Buffett has loaded up on Occidental Petroleum stock in the days following the energy company's $12 billion Permian Basin acquisition. The billionaire investor bought in at a price that has served as a support level for OXY for the past 18 months.
Buffett spent $588.7 million on more than 10 million shares of OXY between Dec. 11-Dec. 13, with a price range of 55.58 to a fraction more than 57, according to a regulatory filing late Wednesday.
Occidental Petroleum stock gained 2.7% to 58.77 Thursday during market action. On Tuesday, OXY shares advanced 3% to 57.22 during Wednesday post-Fed announcement rally. After climbing to nearly 67 in October, OXY stock has slumped over the past five weeks as U.S. oil prices fell below $70 per barrel.
Warren Buffett purchased more than 5 million OXY shares on Dec. 12, the day after Occidental Petroleum announced it agreed to purchase privately held Permian Basin oil producer CrownRock in a deal valued at around $12 billion. The purchase will be the company's first major acquisition since 2019. Buffett bought those OXY shares at 55.58.
Occidental Petroleum's bid for CrownRock comes as energy companies look to increase their share of the consolidating Permian Basin pie. At the head of the trend were recent M&A moves by energy giants Exxon Mobil and Chevron. Buffett owns a nearly 6% stake in CVX.
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Occidental plans to finance the purchase by issuing $9.1 billion of new debt along with approximately $1.7 billion in common stock, according to the company's announcement. OXY expects the acquisition to close in the first quarter of 2024.
Occidental Petroleum on Monday also said it would increase its quarterly dividend per share by 4 cents to 22 cents. Ahead of the raise, the stock currently yields 1.3%.
Warren Buffett: The OXY Price Target
Through the latter half of 2022 Buffett loaded up on OXY, with the billionaire investor targeting shares in the $57-$61.50 price range. Berkshire has substantially increased its stake in the international oil play over the past year, putting OXY among Buffett's top holdings.
MarketSmith charts show OXY stock finding price support around the 55-57 range, dating back to June 2022.
Warren Buffett's Berkshire Hathaway holds a 25.9% stake in Houston-based Occidental Petroleum. In August 2022, the Federal Energy Regulatory Commission granted Buffett and Berkshire Hathaway approval to purchase up to 50% of available OXY stock.
However, Buffett told shareholders earlier this year he has no intention of taking over the company. Ahead of earnings Occidental Petroleum Q3 earnings in early November, between Oct. 23-Oct. 25, Berkshire added 3.92 million OXY shares.
Buffett made those OXY buys at a share price between 62.68-63.04, according to regulatory filings.
Shares of OXY have booked declines in two straight months and is down more than 3% so far in December. Occidental stock has a 23 Composite Rating out of 99. The Warren Buffett stock also has a 25 Relative Strength Rating and a nine EPS Rating.
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