Occidental buys back 6.5% of Warren Buffett’s preferred stock

OCCIDENTAL Petroleum redeemed US$647 million, or about 6.5 per cent, of Berkshire Hathaway’s preferred stock as the oil company begins paying back Warren Buffett four years after he helped finance its acquisition of Anadarko Petroleum.

The total cost of Occidental’s redemption was US$712 million as it includes a 10 per cent premium to Buffett and matches distributions to common stock holders, the Houston-based company said in a presentation on Tuesday (May 9). Buffett’s preferred stock carries an 8 per cent annual dividend, making it an expensive part of Occidental’s capital structure.

Separately, Berkshire owns a 24 per cent stake in Occidental 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 this month. However, he ruled out buying the oil producer outright.

Occidental’s adjusted earnings were US$1.09 a share in the first quarter, missing the Bloomberg Consenus of US$1.23 a share. It raised its full-year production guidance 1.3 per cent to almost 1.2 million barrels of oil equivalent a day while keeping capital expenditure unchanged. The stock dropped 1.6 per cent in after-market trading. BLOOMBERG