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“Exclusive: Occidental explores $20 bln-plus sale of Western Midstream, sources say”

Interesting story and news of potential midstream sale. Outside of my circle however. Wow, Energy sector has really been active recently!

https://www.reuters.com/markets/deals/occidental-e...

data centrs for AI are going to draw tremendous amounts of energy in coming years. a small data centre draws an equivalent of 5 averge homes. energy usage is only going up in any case.

“Exclusive: Occidental explores $20 bln-plus sale of Western Midstream, sources say”

Fake news?

WESTERN MIDSTREAM STATEMENT REGARDING RECENT MEDIA COVERAGE

https://investors.westernmidstream.com/2024-02-20-....

The Reuters article covers the Western Midstream position - which is that it isn't attempted a sale. Key extracts:

Occidental owns 49% of Western Midstream and controls the company's operations by also owning its general partner. Western Midstream is structured as a tax-advantaged master limited partnership, and a general partner is its controlling entity.

And

Western Midstream said in a statement it was aware of Occidental's interest in selling assets and could not provide further details, directing questions to Occidental. It added that Western Midstream itself was not running a sale process.

I read this to say that OXY has the ability to sell Western Midstream without majority ownership. Corrections welcome.

I'm a bit curious that Berkshire Hathaway Energy wasn't noted as a potential acquirer. It already has significant pipeline operations. But I don't understand how Buffett's controlling interest in Oxy might complicate this. Also Buffett doesn't like to compete in competitive auctions.

Berkshire has received a split off company in exchange for shares in the parent before. I believe this is how the Duracell split from P&G happened. I'm a bit nervous for how this proceeds because I'm riding Buffett's coattails on the OXY investment by holding the 2027 warrants. Best case OXY gets more in market value from Western Midstream than its intrinsic value and I (and Berkshire!) can continue with an investments on future oil prices and a company (Oxy) running on less debt.

But if Buffett believes the pipeline assets are the key to Oxy's gap between market value and intrinsic value, then I might be left holding the bag (oxy) while Berkshire does better in the investment.

The warrants don't pay dividends while I wait, but they are adjusted for any special dividends. I assume this is just a sale, and not a spinoff to stockholders that would affect warrant holders. Insight welcome.

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