(BRK.A), (BRK.B)
Berkshire Hathaway has agreed to take common shares of cash-strapped Occidental Petroleum in lieu of its scheduled quarterly preferred stock cash dividends.
Occidental was scheduled to pay Berkshire $200 million in dividends, but will instead see its common shares expand by over 17 million shares.
Berkshire doesn’t plan to expand its equity ownership in the oil and gas exploration and production company, which has seen its stock plummet with the global oil price collapse, and has already registered to sell the 17,274,130 shares that were issued to the holders of record of the Series A Preferred Stock as of March 31, 2020.
As of now, Berkshire owns the 17,274,130 shares through eighteen of its insurance companies, including National Indemnity Company, GEICO, Columbia Insurance Company, and BHG Life Insurance Company.
Occidental will announce its first quarter earnings on May 5, and has already announced a further reduction in 2020 capital spending to between $2.7 billion and $2.9 billion from its original 2020 guidance of $5.2 billion to $5.4 billion, a midpoint reduction of 47 percent.
At current commodity prices, 2020 annual production from continuing operations is expected to be 1,275,000 to 1,305,000 BOEPD, a reduction of 6 percent compared to prior guidance of 1,360,000 to 1,390,000 BOEPD.
© 2020 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.