HOUSTON (Reuters) – Several major Occidental Petroleum Corp shareholders have voiced opposition to the oil company’s $38 billion bid for rival Anadarko Petroleum Corp that now includes a pricey financing deal with billionaire Warren Buffett.

Occidental and Chevron Corp are battling for Anadarko and its holdings of nearly a quarter million acres in the Permian Basin, the top U.S. shale field, where low-cost production has helped turn the United States into the world’s top oil producer at 12.3 million barrels per day.

Occidental shares were trading on Thursday at $57.48, down sharply from $66.63 a month ago, prior to rumors it might challenge Chevron. It trumped Chevron’s bid last week, and its offer now includes $10 billion in financing from Buffett’s Berkshire Hathaway Inc in exchange for preferred shares that would pay an 8 percent dividend.

Major Occidental shareholders told Reuters they opposed the plan. They called the $76-per-share bid for Anadarko expensive and cited concerns about the cyclical nature of the oil business as well as the cost of getting financing from Buffett.

Several Occidental shareholders said they viewed Chevron’s lower $65-per-share bid as a better fit because it could more easily swallow a company of Anadarko’s size.

T. Rowe Price Group Inc, which holds shares in all three oil companies, cited merger risks and the cost of the Berkshire infusion. John Linehan, portfolio manager at T. Rowe Price, said Buffett’s deal could allow Occidental to restructure its cash-and-stock deal to avoid a shareholder vote, although its current offer includes a vote.

T. Rowe Price, Occidental’s sixth largest shareholder, had 21.1 million shares at the end of 2018, according to Refinitiv Eikon figures, along with 8 million Chevron shares and 865,000 Anadarko shares.

Berkshire would receive a warrant to purchase up to 80 million shares of common stock at $62.50 apiece in a private offering, in addition to the preferred stock that will accrue dividends at 8 percent per annum.

“That’s very expensive paper,” Linehan said of the agreement with Berkshire. “They could have borrowed far cheaper than that.”

Occidental did not respond to a request for comment on shareholder objections to the current proposal. Before the Buffett financing plan, it said the deal would result in $3.5 billion in cash flow improvements and that it would sell $10 billion to $15 billion in assets to reduce debt.

Moody’s Investors Service estimated that the assumption of Anadarko’s debt and additional borrowings to cover the offer would add almost $40 billion in debt to Occidental. Moody’s put the company’s debt rating under review for downgrade.

South Texas Money Management, which has $2.3 billion in assets under management, including shares of Chevron and Occidental, hopes Chevron prevails.

At the end of March they owned around 580,000 shares of Occidental and 370,000 shares of Chevron worth $38.5 million and $45.5 million, respectively.

“Right now their bid would allow them to extract a lot of value for that deal,” said Christian Ledoux, South Texas’ chief investment officer. Chevron’s offer was constructed as 25 percent in cash and 75 percent in stock, compared with the 50-50 split from Occidental.

Even if Chevron raised its bid and offered “a little more cash,” Ledoux would still consider the deal a good one for Chevron because the company has expertise in Anadarko’s shale, liquefied natural gas and offshore assets.

Chevron has not raised its bid for Anadarko, saying its agreement would provide “the best value and the most certainty to Anadarko’s shareholders.”

Occidental and Chevron, two of the largest oil and gas producers in the Permian by production volumes, each believe they can best squeeze more oil from Anadarko’s 240,000 acres (97,120 hectares) in the top shale field.

Occidental’s annual meeting is May 10, “and we will be interested to see the interaction between shareholders and the Board,” Mitsubishi UFJ Financial Group analysts wrote in a note on Tuesday.

“On paper the (Occidental) deal looks great if oil is at $65, but we’re in a cyclical industry where commodity prices change dramatically,” said David Katz, president of Matrix Asset Advisors, which held 241,700 shares of Occidental and 61,300 shares of Chevron at the end of April. “They’re basically putting the company at risk.”

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