The Federal Energy Regulatory Commission gave Warren Buffett’s Berkshire Hathaway permission to buy up to 50% of oil company Occidental Petroleum common stock.
Occidental’s share price soared over 9%, closing up $6.40 at $71.29, after the energy regulator said it was letting Berkshire add to its 20.2% stake since it was “consistent with the public interest.”
On July 11 Berkshire applied to increase its stake in Houston-based Occidental, saying it would not hurt competition, undermine regulatory authority, or boost costs for consumers.
The share price of Occidental has more than doubled this year boosted by rising oil prices.
Berkshire also owns $10 billion of Occidental preferred stock, and has warrants to buy another 83.9 million common shares for $5 billion.
The Omaha Oracle is confirming its interest in oil companies after Berkshire also ended June with a $23.7 billion stake in Chevron.
“Buffett is taking advantage of stock market participants who are foolish about the oil and gas industry and consider it a dead business,” said Cole Smead, president of Smead Capital Management, which owns both Occidental and Berkshire shares. “Buffett thinks it can make him wealthy.”
Occidental spokesman Eric Moses said the higher ownership limit was “necessary” because the company owned assets subject to FERC regulation.