Warren Buffett Isn’t Giving Up on Oil

From OilPrice.com: Berkshire Hathaway’s investment profile now includes 704,181 more shares of oil refiner Phillips 66 (NYSE:PSX) common stock, according to a report by Nasdaq.

The shares were purchased at $77.45 a pop, with the total bill exceeding $54 million. PSX was trading at $78.48 as of 1:27 EST on Friday.

With this most recent purchase, Warren Buffett’s holding company now owns over 15 percent or 79.5 million shares of Phillips 66, according to recent filings with the Securities and Exchange Commission.

Berkshire first purchased a sizable stake in the Houston-based refiner in 2012. In late 2013, the company sold over $1.4 billion in PSX shares to acquire one of its additive businesses. Since then, Berkshire’s stake in Phillips 66 has grown steadily.

In February, the holding company bought $1 billion in additional PSX shares, giving the firm a 14.1 percent interest in the American refiner.

Earlier this month, Phillips 66 and Plains All American Pipeline united to form an LLC for an oil pipeline in the STACK area of Oklahoma, for which Phillips paid US$50 million to Plains for a 50 percent interest in the project.

In late July, Phillips 66 reported adjusted Q2 earnings of 94 cents per share with revenue of $22.31 billion. Earnings fell 50% year over year, down to $499 million from $1 billion the year prior.

The oil and gas industry has been suffering through its worst revenue cycle in a generation, with most companies hemorrhaging money at today’s barrel prices. Debt is piling up and the losses are starting to become a concern for lenders and employees, thousands of whom have found themselves without a job in recent months. Shareholders are getting burned by plummeting share prices, but Berkshire, as well as other major investors, have continued to purchase oil and gas stocks.

PSX-2016-08-29

Phillips 66 (NYSE:PSX) shares were unchanged in premarket trading Monday at $78.62 per share. PSX has fallen 3.9% year-to-date, versus a 6.6% rise in the S&P 500 during the same period.

This article is brought to you courtesy of OilPrice.com.

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