Occidental Buys Back $522 Million of Berkshire Preferred Stock

(Bloomberg) — Occidental Petroleum Corp. bought back $522 million of Berkshire Hathaway Inc.’s preferred stock in the second quarter, demonstrating its willingness to repay Warren Buffett even as commodity prices drop.

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The purchase brings Occidental’s redemptions this year to 12% of Berkshire’s initial $10 billion investment, which was used to fund the producer’s acquisition of Anadarko Petroleum Corp. in 2019. Berkshire’s preferred stock carries an 8% annual dividend, making it an expensive part of Occidental’s capital structure.

Separately, Berkshire owns 25% of Occidental’s common stock and is the company’s largest shareholder, according to data compiled by Bloomberg. Berkshire is willing to buy more Occidental common stock, Buffett said at its shareholder meeting in Omaha earlier this year. However, he ruled out buying the oil producer in its entirety.

Occidental shares dropped as much as 2.7% in after-market trading as the company missed analysts’ earnings estimates because of weaker realized prices for its gas production. The company raised its 2023 production guidance 1.3%, but also reported higher capital spending than expected.