Subject: Re: More OXY
Looking back at my career in the oil business, one of the things that stands out are the extreme cycles that occurred (1980-2020) due to fluctuating extremes in oil price. Truly a roller coaster ride.

Oil Price High:
Higher Profits/Investors Euphoric/Capital Available/Loose Internal Controls/Poor Capital Allocation/High Staffing Levels/Flood of Inexperienced New Hires

Oil Price Low:
Lower Profits/Investor Disdain/Tight Capital/Stringent Internal Controls/Better Capital Allocation/Staff Reductions/Loss of Industry Expertise

These extreme fluctuations make managing these business across multiple cycles quite difficult. Particularly for long term projects that may take a decade or more to complete before they generate revenue - offshore development or building out large scale carbon capture infrastructure for example.

As noted previously, M&A can occur at low oil price levels when well capitalized opportunistic "BIG FISH" swallow up "little fish" that are vulnerable when public markets/investors are skittish.

There is no doubt that OXY's asset base would be a very nice "bolt on" for one of the few remaining "BIG FISH". If OXY were wholly owned by Berkshire, the chance of an opportunistic "BIG FISH" swallowing them at some point would go to zero. Further, this would allow OXY management to better manage the business through the up/down price cycles. Berkshire would be much more tolerant of "lumpy" year to year earnings compared to a public market that focuses only on the next quarter. OXY's management would be allowed, perhaps even encouraged, to initiate projects that made good long term sense even if oil prices were temporarily low.

Capital (in quantity) would be available from the Parent for the right project in an industry that may soon become starved for capital (ESG movement). A wholly owned oil and gas company could provide Berkshire a new place to invest significant amounts of capital at returns higher than BHE's regulated and/or other wholly owned businesses can currently provide.

Berkshire management loves oil in a world where where developed nations increasingly hate it. Meanwhile, large developing nations continue to see rising oil demand in order to raise the living standards of their citizens (ESG be damned!).

Wonder if these dynamics might also play into Warren's/Charlie's thesis with regard to a large long term investment in OXY?

Would love to hear some pointed questions on this topic at the upcoming AM in May (wink, wink. nudge nudge. to those planning to attend and/or send in questions).

Have we beaten this one to death?