Berkshire Hathaway to accept Occidental Petroleum’s common shares as quarterly dividend

Berkshire Hathaway (NYSE:BRKa) said on Wednesday that it will accept Occidental Petroleum’s (NYSE:OXY) common shares as payment for the quarterly dividend. The agreement is expected to ease the pressure on the U.S oil major’s balance sheet.

Wednesday’s regulatory filing also highlighted that Berkshire will have the authority to sell the shares immediately. The American multinational conglomerate, however, didn’t divulge its intention regarding the shares that are currently priced at around £183 million.

In 2019, Berkshire invested £7.97 billion to buy Occidental Petroleum’s preferred shares. The move was targeted at financing its Anadarko Petroleum acquisition of £30.30 billion.

Both Occidental and Berkshire refrained from commenting on the news any further.

Occidental Petroleum Is Currently 68% Down Year To Date

Occidental Petroleum requested Trump Administration last week to help improve liquidity for the oil industry.

Following the announcement on Wednesday, Occidental Petroleum was reported trading around 12% down in the stock market at £10.37 per share. The stock is roughly 68% down year to date. At the time of writing, Occidental has a market cap of £9.69 billion that equals a fragment of its investment in Anadarko.

The recent drop in global oil price and Anadarko acquisition pushed Occidental into £31.91 billion worth of debt. The oil giant also struggles with sources to cover its expenditure. In March, Occidental slashed its budget for 2020 and reduced its annual dividend from £2.52 to only 35 pence per share.

As per the filing on Wednesday, companies on Berkshire’s portfolio currently hold close to 4.7% of the oil company’s common shares. Occidental had also brought 3 directors on board in March who were nominated by Carl Icahn. The activist investor had also opposed its Anadarko acquisition and had suggested selling the company than moving ahead with the acquisition.

Berkshire Hathaway’s Performance In The Stock Market

At £2,25,353 per share, Berkshire Hathaway is currently more than 15% down year to date in the stock market. On March 23^rd, the stock dropped to as low as £1,91,450 per share. Just one month earlier in late February, Berkshire had posted a record-high of £2,73,972 per share.

Its performance in 2019, on the contrary, was recorded fairly upbeat with an annual gain of around 13%.

At the time of writing, Berkshire Hathaway has a market cap of £365.29 billion and has a price to earnings ratio of 5.67.