THE STORYAPRIL 28, 2019
Occidental's jet flew to Omaha two days before Berkshire's $10 billion deal
On Sunday, April 28, 2019, a Gulfstream G550 registered N550XY flew from Ellington Field, Houston, to Eppley Airfield, Omaha, spent 2 hours 16 minutes on the ground, and flew back. Two days later, Occidental announced that Berkshire Hathaway would put money into its bid for Anadarko. Flight data Filing
- 1 · The tipA jet in Omaha on a Sunday, public as it flew; reported the next day.
- 2 · The deal$800 million a year on $10 billion of 8% preferred, for Berkshire alone.
- 3 · The priceOccidental −10.3% by the day it signed; Chevron walked away with $1 billion.
- 4 · Afterwards8 steps in the filings, 2019 to 2026; the last: the OxyChem sale completes.
Every public record of those days on one screen: the jet, the filings, what the press reported, and the prices. It does not say who should have traded. Every item says where it comes from.
- Flight data OpenSky flight lists, FAA registry
- Filing SEC EDGAR, quoted
- Reported press, not confirmed by a filing
- Market data daily closes and volume
- Letter Berkshire's letters, word for word
RADAR · N550XY TRACKSAPR 8–MAY 17 · RINGS FROM KOMA
Straight lines between where receivers first and last saw the aircraft. Crimson: the Omaha legs. Legs abroad end at the frame. Flight data
WHAT EACH SIDE GOTFROM THE FILINGS AND THE CLOSES
Berkshire Hathaway
$800 million a year
in dividends on $10 billion of 8% preferred stock, paid ahead of common shareholders, plus a warrant for 80 million shares at $62.50. Filing
Its own 13Fs list Occidental common stock from Q1 2022 (136.4 million shares); at Q2 2026, 264.9 million. Earlier: 7.5 million to 18.9 million shares, Q3 2019–Q1 2020. Filing
Chevron
$1 billion
termination fee from Anadarko when Chevron's agreement ended; its shares +4.2% from the close before the flight to the day Occidental signed. Filing Market data
Occidental's shareholders
−10.3%
from the close before the flight to the day Occidental signed for Anadarko; −16.2% by Jul 31. The preferred and the warrant went to Berkshire, not to them. Market data
The jet trackers
2 days early
The flight was public on Sunday; the announcement came 2 days later. The signal said a meeting may have happened, not which way to trade: Occidental moved −4.0% by the announcement. Flight data Reported Market data
TIMELINE · EVERY RECORD, DAY BY DAYCENTRAL TIME
Move across the chart, or tab to it and use the arrow keys, to read any day.
FLIGHT STRIPS · N550XYUTC
| Date | From | To | Seen | Status |
|---|---|---|---|---|
| KEFD | KHPN | 1218Z–1523Z | LANDED | |
| KEFD | KHPN | 1146Z–1448Z | LANDED | |
| KHPN | KBWI | 1156Z–1233Z | LANDED | |
| KBWI | LFPB | 2135Z–0433Z | LANDED | |
| LFPB | KHOU | 1935Z–0527Z | LANDED | |
| KHOU | KMCO | 0626Z–0802Z | LANDED | |
| KISM | KEFD | 0209Z–0359Z | LANDED | |
| KEFD | KOMA | 1249Z–1443Z | OMAHA | |
| KOMA | KEFD | 1659Z–1850Z | OMAHA | |
| KEFD | KVNY | 1246Z–1556Z | LANDED | |
| KVNY | KSFO | 0008Z–0058Z | LANDED | |
| KSFO | KMDW | 2255Z–0220Z | LANDED | |
| KMDW | KCDW | 2203Z–2326Z | LANDED | |
| KMMU | KBOS | 0003Z–0041Z | LANDED | |
| KBOS | KEFD | 1748Z–2121Z | LANDED | |
| KEFD | EHRD | 1607Z–0107Z | LANDED | |
| EHRD | KHOU | 0612Z–1607Z | LANDED | |
| KHOU | KEFD | 1705Z–1719Z | LANDED | |
| ···· | KBFI | 1905Z–2305Z | LANDED | |
| KBFI | KIAD | 2033Z–0054Z | LANDED | |
| KIAD | KEFD | 1310Z–1555Z | LANDED |
The only aircraft listed as a G550 in or out of Omaha that day; the only Houston–Omaha flight that day not under an airline call sign. The FAA registry today has no aircraft registered as N550XY; the press called it Occidental's Reported. Earlier Occidental aircraft carried the same XY suffix: N20XY, N40XY, N80XY Flight data.
EVENT LOG17 ENTRIES
- Filing 1. Chevron agrees to buy Anadarko.
to acquire all of the outstanding shares of Anadarko in a stock and cash transaction valued at $33 billion, or $65 per share.
Chevron 8-K - Filing 2. Occidental makes a higher offer for Anadarko.
in which Anadarko shareholders would receive $38.00 in cash and 0.6094 shares of Occidental common stock for each share of Anadarko common stock.
Occidental 8-K - Flight data N550XY: Baltimore/Washington to Paris–Le Bourget, 4:36 p.m. to 11:34 p.m. Central.
- Flight data N550XY: Paris–Le Bourget to Hobby, Houston, 2:35 p.m. to 12:27 a.m. the next day Central.
- Flight data N550XY: Ellington Field, Houston to Eppley Airfield, Omaha, 7:50 a.m. to 9:43 a.m. Central.
- Reported A. Bloomberg: Occidental Jet Flew to Omaha This Weekend, Flight Data Shows
- Reported B. CNBC: A corporate jet suggested Buffett's energy deal was in works days before it was announced
- Filing 3. Berkshire commits $10 billion to Occidental.
Berkshire Hathaway will receive 100,000 shares of Cumulative Perpetual Preferred Stock with a liquidation value of $100,000 per share, together with a
Occidental 425 - Reported C. Bloomberg: Occidental Jet Flew to Paris After Anadarko Offer, Data Shows
- Filing 4. The terms, signed: preferred stock and a warrant.
Dividends on the Preferred Stock will accrue on the face value at a rate per annum of 8% but will be paid only when, as and if declared by Occidental’s
Occidental 8-K - Filing 5. Berkshire's own report records the commitment.
On April 30, 2019, Berkshire committed to invest a total of $10 billion in Occidental Petroleum Corporation (“Occidental”) in connection with Occidental’s proposal to acquire Anadarko Petroleum Corporation (“Anadarko”).
Berkshire Hathaway 10-Q - Filing 6. Occidental agrees to sell Anadarko's African assets to Total.
to sell Anadarko’s Algeria, Ghana, Mozambique and South Africa assets to Total S.A. (“Total”) (NYSE: TOT) for $8.8 billion.
Occidental 8-K - Flight data N550XY: Ellington Field, Houston to Rotterdam, 11:08 a.m. to 8:08 p.m. Central.
- Flight data N550XY: Rotterdam to Hobby, Houston, 1:13 a.m. to 11:08 a.m. Central.
- Filing 7. Chevron will not raise its offer.
On May 9, 2019, Chevron Corporation issued a news release announcing that it will not increase its offer to acquire Anadarko Petroleum Corporation.
Chevron 8-K - Filing 8. Chevron's agreement ends; Anadarko pays the fee.
As a result, following payment by Anadarko to Chevron of the termination fee of $1 billion in cash, the Merger Agreement was terminated on May 9, 2019.
Chevron 8-K - Filing 9. Occidental agrees to buy Anadarko.
Occidental will acquire Anadarko Petroleum Corporation (“Anadarko”) (NYSE: APC) for $59.00 in cash and 0.2934 shares of Occidental common stock per share of Anadarko common stock, in a transaction valued at $57 billion, including the assumption of Anadarko’s debt.
Occidental 8-K
WHAT BERKSHIRE GOTFILED
$100,000 per share, and (2) a warrant (the “Warrant”) to purchase 80,000,000 shares of Occidental’s common stock, par value $0.20 per share (the “Common Stock”), (together, the “Financing Transaction”).
FilingDividends on the Preferred Stock will accrue on the face value at a rate per annum of 8% but will be paid only when, as and if declared by Occidental’s
FilingThe Warrant is exercisable at an exercise price of $62.50 per share of Common Stock at the holder’s option at any time or from time to time, in whole or
FilingCommencing on the tenth anniversary of the issue date, the Preferred Stock will be redeemable at Occidental’s option in whole or from time to time in part, at a
Filing
WHAT THE PRICES DIDCLOSES
From the close before the flight to the close on the day of the announcement: OXY −4.0%, CVX +2.5%, BRK-B +1.2%. By the day the agreement was signed: OXY −10.3%, CVX +4.2%, BRK-B −2.4%. Market data
| Ticker | Close before the flight | First session after it | Day of the announcement | Agreement signed | Later |
|---|---|---|---|---|---|
| OXY | $61.31 | $60.13 | $58.88 | $54.97 | $51.36 |
| CVX | $117.10 | $117.72 | $120.06 | $121.99 | $123.11 |
| BRK-B | $214.22 | $216.58 | $216.71 | $209.02 | $205.43 |
| XLE | $33.11 | $33.08 | $33.05 | $32.02 | $31.35 |
| SPY | $293.41 | $293.87 | $294.02 | $288.10 | $297.43 |
AFTERWARDS · 2019 TO 2026OCCIDENTAL 8-KS · BERKSHIRE 13FS
- The $10 billion closes.
On August 8, 2019, Occidental closed the previously announced sale to Berkshire Hathaway Inc. and certain of its subsidiaries of (1) 100,000 shares of Preferred Stock and (2) a warrant (the “Warrant”) to purchase 80,000,000 shares of Occidental Common Stock, for an aggregate purchase price of $10.0 billion in cash (the “Berkshire Hathaway Investment”).
Filing Occidental 8-K - A dividend paid in Occidental stock.
an aggregate of 17,274,130 shares of Common Stock were issued to the holders of record of the Series A Preferred Stock as of March 31, 2020.
Filing Occidental 8-K - And again.
an aggregate of 11,606,992 shares of Common Stock were issued to the holders of record of the Series A Preferred Stock as of June 30, 2020.
Filing Occidental 8-K - Back to cash.
to be paid in cash at a rate of $2,000 per share, on October 15, 2020 to holders of record of the Series A Preferred Stock as of September 30, 2020.
Filing Occidental 8-K - Occidental starts buying back the preferred.
Triggered the redemption of $647 million of preferred stock, initiating the next phase of shareholder return framework
Filing Occidental 8-K - Over $1.5 billion bought back that year.
Triggered the redemption of $342 million of preferred stock, bringing year-to-date redemptions to over $1.5 billion or 15% of preferred equity
Filing Occidental 8-K - Berkshire agrees to buy OxyChem.
today announced a definitive agreement for Berkshire Hathaway to acquire Occidental’s chemical business, OxyChem, in an all-cash transaction for $9.7 billion, subject to customary purchase price adjustments.
Filing Occidental 8-K - The OxyChem sale completes.
Occidental completed the Divestiture for $9.7 billion in cash, subject to customary purchase price adjustments as set forth in the Purchase Agreement.
Filing Occidental 8-K
Prices: Yahoo Finance, weekly closes, adjusted for later splits. Shares: Berkshire's own 13F filings, every quarter. Market data Filing
DEBRIEF · WHAT THE FLIGHT SHOWED, AND WHAT IT DID NOT
- What was public, and when. The flight was broadcast by the aircraft itself (ADS-B) and picked up by ground receivers as it happened, on Sunday, Apr 28. The first report of it we know of came the next day, from a research firm, by way of Bloomberg Reported. Occidental's announcement came two days after the flight Filing.
- What it could not show. Who was on board, who they met, whether anything was agreed, or on what terms. The terms were in Occidental's 8-K of May 3, 2019: preferred stock and a warrant, which no other shareholder was offered Filing.
- Which way it pointed. The money went to the bidder, not the target. A flight to Omaha says a meeting may have happened; it does not say whether the bidder's shares or the target's would rise, or fall.
- The same jet, a different trip. N550XY flew to Paris–Le Bourget on Apr 25, eleven days before Occidental filed its agreement to sell Anadarko's African assets to Total Flight data Filing. Bloomberg reported the Paris trip afterwards Reported.
ON FILE · WHAT THE LETTERS SAIDVERBATIM
The latest letter, two months before the flight
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Prices are sky-high for businesses possessing decent long-term prospects.
-
having pledged to always hold at least $20 billion in cash equivalents to guard against external calamities
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Our smiles will broaden when we have redeployed Berkshire’s excess funds into more productive assets.
On taking preferred stock instead of common
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If I had negotiated for common rather than preferred, we would have been better off at yearend 1995 by $625 million, minus the "excess" dividends of about $70 million.
On corporate jets
-
the cost of replacing planes also continues to rise at the now-established rate of 100% compounded annually, it will not be long before Berkshire's entire net worth is consumed by its jet.
Years later, on Occidental
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Berkshire has no interest in purchasing or managing Occidental.
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Under Vicki Hollub’s leadership, Occidental is doing the right things for both its country and its owners.
Sources
- Flight data Flight lists: Matthias Schäfer, Martin Strohmeier, Xavier Olive and others, Crowdsourced air traffic data from the OpenSky Network, Zenodo, CC BY 4.0. Aircraft registry: FAA releasable aircraft database.
- Filing Chevron 8-K, April 12, 2019
- Filing Occidental 8-K, April 24, 2019
- Filing Occidental 425, April 30, 2019
- Filing Occidental 8-K, May 3, 2019
- Filing Berkshire Hathaway 10-Q, May 6, 2019
- Filing Occidental 8-K, May 6, 2019
- Filing Chevron 8-K, May 9, 2019
- Filing Chevron 8-K, May 10, 2019
- Filing Occidental 8-K, May 10, 2019
- Reported Bloomberg, April 29, 2019: Occidental Jet Flew to Omaha This Weekend, Flight Data Shows
- Reported CNBC, April 30, 2019: A corporate jet suggested Buffett's energy deal was in works days before it was announced
- Reported Bloomberg, May 1, 2019: Occidental Jet Flew to Paris After Anadarko Offer, Data Shows
- Reported Bloomberg, July 2, 2019: Hedge Funds Are Tracking Private Jets to Find the Next Megadeal
- Market data Daily prices and volume: Yahoo Finance.
Times are Central (UTC−5) unless marked Z (UTC). Flight times are when receivers first and last saw the aircraft, close to take-off and landing.