The recent buying spree has been years in the making for Berkshire, which worked with Occidental to finance an acquisition in 2019 and received regulatory approval to purchase up to 50% of Occidental back in August 2022, when it held around 20%. At the time, financial experts predicted an acquisition was likely, although Buffett told Berkshire’s annual shareholder meeting in May 2023 that it wasn’t going to take control. “We wouldn’t know what to do with it,” he said.

While Berkshire hasn’t fully swallowed the oil and gas giant yet, it has scooped up around 7.3 million shares, with the stock price rising from under $60 on June 5—the first day of the nine purchase days—to around $61.20 the time of publication. In a previous interview with CNBC, Buffett said that he became interested in Occidental after reading a transcript of the company’s earnings call. “I read every word, and this is exactly what I would be doing,” he said.

The reasons for Berkshire’s interest are not obvious aside from its existing relationship with Occidental. “That’s been a question people have been asking for quite some time,” said Leo Mariani, a senior energy analyst for brokerage firm Roth Capital. “I’m not sure anybody has a perfect answer.”

‘They have a history there’

Occidental may not seem like a natural target for Berkshire, which is famed for its massive positions in buzzier stocks like Apple and Coca-Cola. Occidental, however, is far from its only holding in the energy sector, as it owns about 7% of Chevron, though the investment giant cut back its stake earlier this year. Berkshire has also been reducing its stake in the Chinese electric vehicle company BYD, holding around 7% of the manufacturer and selling around 1% of the total outstanding shares since October.

Greggory Warren, a senior stock analyst for Morningstar covering Berkshire Hathaway, said that Buffett’s recent buying spree of Occidental is likely not a reflection of a broader strategy toward the energy sector, and that the company has been wary of BYD over concerns with the Chinese market.

Founded in 1920 and later headed by the legendary businessman Armand Hammer, Occidental expanded operations around the world, from Venezuela to the North Sea. Occidental’s current CEO is Vicki Hollub, who took over in 2016, becoming the first woman to lead a major American oil company. Her early years were marked by a collapse in crude prices, and Hollub was forced to cut costs and exit from noncore regions in the Middle East and North Africa. In Buffett’s interview with CNBC, he said that Hollub is “running the company the right way.”

Berkshire Hathaway’s relationship with Occidental began in 2019, when it committed $10 billion to the firm’s cash-and-stock bid for rival petroleum company Anadarko, and received the right to buy Occidental shares. Three years later, Berkshire Hathaway won regulatory approval to buy up to 50% of the company.

Mariani speculated that Berkshire Hathaway wants more oil exposure and went with a company it knew. “I’m just going to chalk it up to the fact that they have a history there for a number of years and are familiar with the company,” Mariani told Fortune.

He added that Occidental’s differentiation from other oil and gas companies comes from its investment in carbon capture, or removing carbon dioxide from the environment, and specifically direct air capture. While Mariani said that decarbonization is a costly process that will likely lose money for the next handful of years, Occidental could find a customer base with companies such as airlines that are trying to be “corporate citizens.”

Warren, the Morningstar analyst, said Occidental’s appeal is instead driven by Buffett’s desire to diversify his portfolio, and the fact that Berkshire Hathaway already has regulatory approval to scoop up more shares in Occidental. "The stuff that Berkshire buys in scale like this is more a function of what they can buy as opposed to huge preferences one way or another,” he told Fortune. “Their opportunity set is somewhat limited by the size of their portfolio.”

Despite Buffett’s interest in Occidental, its outlook isn’t entirely rosy. In early May, Morningstar published a research note lowering its fair value estimate of Occidental’s stock by 7% to $53 per share, reflecting lower oil prices. The analysts also cited the slow progress of Occidental’s planned acquisition of shale oil producer CrownRock, which it hopes to complete by August.