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Occidental Petroleum (OXY) has brought Warren Buffett and Berkshire Hathaway (BRK.A) into its battle with Chevron (CVX) for control of Permian-Basin-rich Anadarko Petroleum (APC).

Up until the entry of Buffett, Chevron had the inside edge even though it had offered a lower price of $33 billion in cash and stock for Anadarko. That company’s board had gone with the Chevron offer because it feared that Occidental didn’t have enough financial firepower to close its bid without pushing down the price of the Occidental shares that Anadarko shareholders would get as part of the purchase price.

But today Buffett said Berkshire Hathaway would put $10 billion into Occidental in exchange for preferred stock and warrants.

And suddenly Occidental’s bid isn’t anywhere near as risky as it was.

Occidental–and its shareholders–would pay a hefty price for Buffett’s seal of approval. In exchange for his $10 billion Buffett and Berkshire Hathaway would get preferred stock paying 8%. That’s expensive capital considering that Occidental’s common stock pays a dividend of 4.71% and the oil company’s debt pays, on average, less than half that rate in interest. (Bloomberg calculates that the average coupon on Occidental’s $10.4 billion in debt is 3.8%.) Berkshire Hathaway would also get warrants to buy up to 10 million shares of Occidental at $62.50. The stock closed at $58.88 today, April 30.

The deal with Buffett struck many share- and bondholders as “odd.” The cost of that $10 billion seems high, especially given that Occidental had claimed to have the financing for its bid to buy Anadarko all lined up. On the news Occidental shares are down 2.08% today. Occidental’s debt also took a hit with yields climbing 13 basis points on a drop in the price of the bonds.

Wall Street speculation is that the Buffett money is so valuable to Occidental because it would allow Occidental CEO Vicki Hollub to proceed with the deal without putting it to a shareholder vote. I’ve also heard a few voices questioning the value of the deal to Berkshire Hathaway shareholders at a time when global warming is casting a shadow over the value of oil company assets. But Berkshire Hathaway finished 2018 with $112 billion to invest and its hard to put that much money to work without driving up the price of the assets you want to buy and cutting into your future returns.