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Cramer Gives Thumbs-Down To Buffett's Involvement With Occidental Petroleum

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Cramer Gives Thumbs-Down To Buffett's Involvement With Occidental Petroleum

CNBC's Jim Cramer said during his daily "Mad Money" show Friday that Occidental Petroleum Corporation (NYSE: OXY)'s tie-up with Warren Buffett is "ill-advised."

The "Oracle of Omaha" defended his move in a Monday CNBC interview.

Cramer: 'Expensive Money'

To help finance Occidental's proposed acquisition of Anadarko Petroleum Corporation (NYSE: APC), the company secured a loan agreement with Buffett's Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) with an 8-percent interest rate.

Occidental is a "major company" that is backed by a "solid balance sheet," so it could have tapped the traditional debt market and secured a "much lower rate," Cramer said, arguing that Occidental shareholders "should hate this deal."

On the other side of the trade, Buffett secured "incredibly favorable terms," the CNBC host said. 

Buffett: Bet On Long-Term Oil

Speaking to CNBC's Becky Quick Monday, Buffett explained his thought process when entering into the deal with Occidental.

The investment is a "bet on the fact that the Permian Basin is what it is cracked up to be," the 88-year-old CEO said. 

If oil prices move higher over time, Buffett said his investment could "make a lot of money."

The Berkshire Hathaway CEO said he would have considered an acquisition of Anadarko itself if the company had approached Berkshire.

But since this wasn't the case, Buffett said he has no desire to "jump into some other deal that we heard about from somebody else coming to us seeking financing."

Related Links:

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Posted-In: CNBC Mad Money Oil Warren BuffettNews Media Best of Benzinga

 

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