Buffett’s Berkshire Hathaway (NYSE:BRK.A) again loaded up on Occidental Petroleum stock this week purchasing 5.9 million shares for about $345 million.
He purchases shares on Monday and Tuesday for average per-shares prices ranging from $55.99 to $58.37, according to an SEC filing. The purchases bring Berkshire’s stake to 142.3 million shares.
In addition to the common shares in Occidental (OXY), Omaha, Nebraska-based Berkshire (NYSE:BRK.B) holds 200,000 series A preferred stock. Warrants that Berkshire holds would allow it to buy almost 84M shares of OXY stock at $59.624 per share.
I thought I will do a silly exercise on how many proven reserve barrels of oil equivalent (BOE) each share of BRK “owns” thru Berkshire’s holdings of OXY and CVX.
As of end 2021, proven reserves for CHV = 11,300 billion BOE and for OXY = 3,512. (source 10K 2021)
BRK owns approximately 9% of CVX and 15% of OXY (the warrants complicate the calculation slightly).
So BRK “owns” proven reserves of 1,544 BlnBOE (CHV 1,017 + OXY 527).
With 1,470,875 mln BRK.A shares outstanding that works out to 1,053 BOE per A share or 0.7 BOE per B share. That’s over $70 of oil per B share at current prices. So all the rest of the stuff BRK “owns” is about $260 per B share.
And with share buybacks by OXY, CVX and BRK, this keeps increasing.
These are just proven reserves whose definition is 90% probability of profitable extraction, and will obviously vary with oil price.
The unrisked reserves, i.e., total estimated reserves under the ground, but not necessarily commercially viable with current technology or oil prices, is much higher, e.g. for CVX it is 8 times the proven reserves.
I hope that didn’t tarnish your ESG score too much.
Wow, we should feel like Jed Clampett. Fun to consider, thanks for sharing.
Very pleased these huge investments in black gold and great to see WEB open minded, pounce hard and show real conviction! Suspect significant demand will be there for at least my lifetime.
<<Very pleased these huge investments in black gold and great to see WEB open minded, pounce hard and show real conviction! >>
He started investment in oil company more than 10 years ago, in ConocoPhillips. The record isn’t very good. Oil price has been fluctuated greatly in the past 10 years, it’s better not to assume it will stay high from now on.
It was clear that Snowflake was not a good company when they violated the non-disclosure agreement that they signed with Berkshire the day after signing it.
So BRK “owns” proven reserves of 1,544 BlnBOE (CHV 1,017 + OXY 527).
With 1,470,875 mln BRK.A shares outstanding that works out to 1,053 BOE per A share or 0.7 BOE per B share. That’s over $70 of oil per B share at current prices. So all the rest of the stuff BRK “owns” is about $260 per B share.
Interesting…I wonder how many proven barrels of oil I own by virtue of my BRK holdings?
Fun to consider, thanks for sharing.