Buffett Dumps Exxon, Buys Refiner Phillips Stake Due to Falling Oil Prices

Warren Buffett lets go of Exxon shares, and buys refiner Phillips stake because of the fluctuating oil prices.

Bloomberg reports that the billionaire investor announced Wednesday that his Berkshire Hathaway Inc. sold some $4 billion Exxon Mobil Corp. shares due to the dreary outlook of crude oil prices, buying instead a $4.48 billion stake from refiner Phillips 66.

CNBC reported that Berkshire's 57.98 million-share, or 10.8 percent, stake was seen during the filing with the US Securities and Exchange Commission Friday night. Now, Phillips 66 shares closed at $787.23 Friday.

In an interview, Buffett said, "I did get less enthusiastic about crude oil prices at the time we owned (Exxon)."

"I felt that the future wasn't going to be as good as people were thinking it was going to be," he said.

According to CNN, crude oil dropped to $50 in December from July's $100. In the past, investing in big oil seems like the best thing to do. However, the unexpected plummeting of oil prices changed the game. The low price of oil is pressuring Exxon's revenue. It is now having a difficult time making money for its shareholders.

The dwindling oil price isn't the only reason why Berkshire sold its Exxon shares. Buffett said he admires Phillip 66's CEO and Chairman Greg Garland, as well as how the company operates it chemical sector and other businesses. He also said that Berkshire no longer owns shares in any oil and gas production companies.

Buffett said, he is not buying Phillips 66 as a refiner company or as an integrated oil company; instead Berkshire is buying it because they like the company and the management "very much."

Refiners businesses lead the energy industry rising 15 percent this year. Berkshire used to own a stake of the refiner company after it became independent from ConocoPhillips in 2012. Buffett said he always intended to come back in the business when the price was right, and now they did.