Post #1752 by Umm on the Berkshire Hathaway board

Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)

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"It seems to me that if OXY takes the 100 year view, then the better value is to buy more oil assets, preferably adjacent to their fields in the Permian basin, not to repurchase stock. Most of the value of an oil company, by far, lies in its proven reserves. Hollub believes that exploration is not a good use of cash because there is little new oil to be found.
Hopefully she also believes that today's price of OXY stock is attractive (at an enterprise value/proven reserves of $27/boe) since she's repurchasing stock. Maybe Hollub is unable to find anyone willing to sell her reserves at $27/boe. Either that, or she's taking the short view, not the long view. Please correct me if my reasoning is wrong."

I think your reasoning is solid, but you just forgot to account for Manic Mr. Market.

Let other companies spend lots of money on the lottery that is oil exploration. Instead focus on the proven reserves you have. Then when Manic Mr. Market puts one of these exploration companies on sale for some crazy reason (Mr. Musk said that all new cars will be electric in 2030!!!!) then use capital to buy up those proven reserves.

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