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Billionaire investor Warren Buffett said on Monday that the $ 10 billion investment in Berkshire Hathaway's Occidental Petroleum was a bet on long-term oil prices.
"It's also a bet on the fact that the Permian Basin is what it's supposed to be," Berkshire president and CEO Beckley Quick of CNBC said in an interview. But "oil prices will determine if almost all oil stocks are a good investment over time".
"Yes [oil] you earn a lot of money, "he added.
Western revealed Tuesday that Berkshire has pledged to invest $ 10 billion in the company to fund the Anadarko acquisition project. Berkshire would make the investment by purchasing 100,000 preferred shares, which pay an annual dividend of 8%.
Buffett was willing to invest $ 20 billion to help Occidental acquire Anadarko Petroleum, sources told David Faber of CNBC.
When asked why Berkshire would not only buy Anadarko himself, Buffett replied: "That might have happened if Anadarko came to us, but we would not jump into another agreement we heard talk, someone who came to get us funding "
He added that he had never had any communication with Anadarko.
Occidental on Sunday presented a revised takeover bid to Anadarko, proposing to pay shareholders mostly in cash to try to derail Chevron's acquisition of the international oil and gas driller.
– CNBC's Tom DiChristopher contributed to this report.
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