Berkshire Hathaway, owned by Warren Buffett, has recently purchased $524 million worth of stock from Canada’s largest oil company, Suncor. This company gets most of its product from oil sand fields.
According to information acquired from a story on CNN Money, we learned that the purchase was made public in a quarterly disclosure made to the United States Securities and Exchange Commission. This was part of a detailed $89 billion worth of equity investments as of June 30, 2013.
The Suncor Company has been undervalued for many years, and they get the bulk of their product from Alberta, Canada oil sand fields. According to David McColl, transporting the oil has become somewhat of an issue. He is an analyst for Morningstar equity.
A story from Reuters reveals that McColl tells us that a pipeline shortage has forced the company to move products by the railways. After the buy from Berkshire Hathaway, Suncor indicated that it has an ability to adjust this problem in the upcoming years.
“Suncor is one of the most heavily undervalued Canadian integrated oil producers,” McColl tells Reuters. “It is no surprise that a value investor like Berkshire Hathaway would view it as a phenomenal investment opportunity.”
Berkshire’s purchasing of the stock also reminds us of the environmental debate over the Keystone pipeline. Keystone is a pipeline system that would transport bitumen removed from the oil sands in Canada, and do so through the US Midwest to refineries in Texas. This has been a major touchstone for the environmentalists looking to minimize oil sand production. The oil sand products actually contain more greenhouse gases than crude oil.