There are rumors doing the rounds that Warren Buffett aka the Oracle of Omaha is taking a look at Nexen Inc.. the Canadian oil and natural-gas producer. Nexen reported a Q4 loss of C$181 million on writedowns of assets and a loss from gas trading.
Nexen missed by 11 cents the average analyst estimates. Without the writedown, it earned 26 cents a share, said Lanny Pendill, Edward Jones & Co. analyst.
“The trading loss is what caught the markets by surprise. They placed a bet and they got it wrong.”
Nexen fell 2.7% on the Toronto Stock Exchange.
According to Scotia Capital however in an e-mail to clients : “Seems there is a rumor that Berkshire is interested in Nexen – no one can give me comfort that this is indeed the case – they haven’t bought into the E+P [exploration and production] names before... but stranger things have happened. We are looking for a weak [quarter] when they [Nexen] report on Thursday – marketing division coming out with bad numbers/ they laid off a number of their [natural] gas guys."
Warren Buffett went to have a look at the Athabasca oil sands region in August at which time they toured Canadian Natural Resources Ltd.’s Horizon project.
Mr. Buffett said on CNBC that he was there for "educational purposes".
“What I learn today may be useful to me two years from now. I mean, if I understand the tarsands today and oil prices change or whatever may happen, I’ve got that filed away and I can use it at some later date.”
“If you had $120 oil from now till, you know, 50 years from now, that the tarsands would work out very well. But I don’t know the answer to that [where oil prices will be.”
Warren Buffett, in an interview with the Financial Post in 2008 said demand for energy would make the oil sands valuable. It is that they hold the second-largest reserves in the world, afte Saudi Arabia.
“The world will be using more oil 15 or 20 years from now. We are on a course that cannot be changed. It would surprise me if the world doesn’t want to use 100 million barrels a day in 15 or 20 years. ..... You need some ... elephant fields and we haven’t found any elephant fields in the last 15 or 20 years. So the sands are huge.”
Warren Buffett is famous of course for value investing so he would only take a position if he can see long-term value .
Neither Warren Buffett, Berkshire Hathaway nor Nexen would comment.
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