Market Insider reports that Warren Buffett, the sixth richest man in the world, is set to gain indirect exposure to Guyana, the world’s fastest-growing economy and an emerging oil superpower, by way of Chevron’s acquisition of Hess Corporation, announced this week.
In an October 25 article, correspondent, Theron Mohamed, said that Berkshire Hathaway conglomerate owned 123 million Chevron shares as of June 30, giving it a 6.4% stake in the energy giant. The position is worth about $20 billion, based on Chevron’s current stock price and assuming Berkshire didn’t alter its position last quarter.
The U.S. oil major said on Monday that it has entered into a definitive agreement with Hess to acquire all of its outstanding shares in an all-stock transaction valued at $53 billion. The acquisition of Hess upgrades and diversifies Chevron’s already advantaged portfolio and will now include the Stabroek Block offshore Guyana. This license, operated by ExxonMobil, is an extraordinary asset with industry leading cash margins and low carbon intensity that is expected to deliver production growth into the next decade.
Market Insider points out that Buffett’s company stands to gain from the Chevron-Hess merger and the profits it generates from the South American country, if they boost the value of Chevron stock or the company returns them to shareholders via dividends or buybacks.
Market Insider also said it is worth emphasizing that Chevron is just one stock in Buffett’s roughly $350 billion equity portfolio, which itself accounts for just over a third of Berkshire’s $1 trillion of assets. However, Chevron was one of its five largest stock positions last quarter, and Berkshire owns a sizeable stake in the group. As a result, Buffett will likely be paying close attention to the Hess deal and the Guyana venture, given he’s poised to have a not-insignificant amount of money riding on it.
A recent analysis by FocusEconomics, a provider of global forecasts, states that Guyana will lead the list of top five nations with the fastest-growing economies up to 2026. Following its examination of the economic prospects for nearly 200 nations, the independent research group said Macao, a special administrative region of China, along with Fiji, Niger and Libya will trail Guyana on the accelerated growth path.
Holder of world’s 17th largest oil reserves on course to add more barrels
With respect to Guyana, it said growth will average 25.8% due to its oil bonanza. Since
2019 the country has ramped up oil production to what is now close to 400,000 barrels per day (bpd). By 2027, this will exceed 1.2 million bpd with further upside expected by the end of the decade.
