Texirish wrote on OXY:
"My point is that there are many, many opportunities to invest in O&G without having to own it for the long run. And you preserve your option to get out if it turns down. There’s nothing unique about OXY versus many other companies. If WEB sees something special about them, he understands the industry far better than I do. There’s no evidence he even knew about them until BAC turned them down for a loan and sent them his way.
Thought I’d post a couple of interviews that Warren and Charlie did with Becky soon after the $10 Billion pref stock deal in 2019. They give some insight into what both were thinking at the time.
In the first interview, Charlie claims he had long followed Occidental as a company and more recently had been following the bidding war between Chevron and OXY for Anadarko. Thinks OXY/Anadarko deal was a good deal. The Permian Basin has a lot of oil and gas in it. Nobody asked us to buy Anadarko outright, but we might have.
Charlie is no stranger to oil and gas investments. I would think he has a firm grasp on the concepts. Perhaps better than most petroleum engineers. And let’s not forget Charlie’s greatest investment mistake was not buying 1500 more Belridge Oil shares when they were offered to him in 1977:
Perhaps Charlie views the OXY deal as having similar qualities to Belridge. An opportunity to redeem himself?
Another 2019 Becky interview below during the same time period with Warren describing events leading up to the deal:
Again, Warren implies he might have bought Anadarko outright but they weren’t approached and he wouldn’t have stepped into an ongoing deal process.
Post Anadarko purchase, OXY now has the largest acreage position in the Permian Basin (more than Chevron and Exxon)by a wide margin. Certainly that makes OXY unique. Not all acreage is equal but more acreage generally means more potential reserve growth.
I think (and Texirish disagrees with me)that OXY has a competitive advantage in CO2 EOR technology and infrastructure. I predict there will be a lot of oil recovered from the new shale wells through CO2 EOR - oil not currently accounted for on OXY’s reserve books. Carbon capture could play into this eventually by reducing their EOR operating costs. Naturally sourced CO2 is currently a significant part (40%?) of their current EOR operating cost. Warren and Charlie are likely aware of all of this.
If nothing else the above two interviews give further insight into Warren and Charlie’s thinking at the time.
Earlier this week Warren was buying more OXY common below $60 share. Is he done? I guess we’ll see!