Post New

I wonder if Buffett will nibble some more at OXY stock. Occidental's stock price, now at $39, has dropped about 16% since Berkshire's last purchases, made at about $47, in Dec 24 and Feb 25. OXY's enterprise value to proven reserves is now down to an attractive $15/barrel of oil equivalent (boe).

"OXY's enterprise value to proven reserves is now down to an attractive $15/barrel of oil equivalent (boe)."

Here are the enterprise values/proven reserves of some purchases of oil companies by other oil companies in the last few years. In all of these cases the buyers were basically just purchasing proven reserves.

Aug '19, Occidental buys Anadarko for $38/boe (OXY hugely overpaid)
Oct '23, Exxon buys Pioneer for $24/boe
Oct '23, CVX buys Hess for $41/boe (CVX hugely overpaid)
Nov '23, OXY buys CrownRock for $19/boe
Sept '24, Diamondback buys Endeavor for $17/boe
Nov '24, ConocoPhillips buys Marathon for $15/boe

By this measure (EV/proven reserves) OXY is currently attractively priced. Berkshire has purchased shares of OXY 36 times since 4Q2019, paying as high as $62/share.

https://stockcircle.com/portfolio/warren-buffett/o...

Note: West Texas Intermediate crude oil was $91/barrel in Sept '23, as compared to $55/barrel today. This, combined with a crude oil surplus today, explains some of the high prices paid for acquisitions in late 2023. It does not explain the overly high price paid by Occidental for Anadarko in Aug '19. You may recall that Carl Icahn sued Occidental over the deal.

"I wonder if Buffett will nibble some more at OXY stock."

OXY stock is up 3.7% today. Somebody's buying.

Many other shale drillers are up too, e.g DVN, PR.

Trump’s blockade of Venezuela oil tankers raising oil prices and prospect of it going even higher if conflict escalates.

I wonder if Buffett will nibble some more at OXY stock.

I've been riding WEBs coattails on this one for a while now ... only to suffer paper losses. However, I have a theory that there is a low price (~$40) where people (especially Berkshire) are strongly tempted to add shares, so it acts as a kind of floor on the price. Using that theory, I regularly sell puts on OXY. Most of them expire worthless, but once in a while I get assigned and snag some additional shares at a buck or two under the prevailing price. These trades serve to lower my overall basis, and will increase my gains if the stock eventually rises someday.

Post New

Berkshire Hathaway FAQ

---

Contact Shrewd'm
Contact the developer of these message boards.