Oxy loses $8.4 billion in second quarter battered by coronavirus

[Elderberry]

Houston Chronicle by  Paul Takahashi Aug. 11, 2020

Occidental Petroleum is not planning to increase oil production next year but will instead focus on paying down its massive debt and strengthening its finances in the aftermath of the coronavirus-driven oil bust.

The Houston independent also is looking to partner with other oil and gas companies to develop new drilling projects. The joint ventures would help Oxy save costs by pooling resources.

“I don’t see us growing next year,” CEO Vicki Hollub said in a conference call with analysts Tuesday. “We will spend $2.7 billion to $2.9 billion in maintenance capital to keep production flat next year and use all available cash to retire our debt. That’s our highest priority for next year.”

The pronouncement came as the Houston independent posted a steep second-quarter loss of $8.4 billion compared with a profit of $635 million during the same period a year ago. Second quarter revenue fell by one-third to about $3 billion, down from about $4.5 billion during the same period a year ago.

Oxy, saddled with debt from its $38 billion acquisition of Anadarko Petroleum last year, wrote down the value of its oil and gas assets by $6.6 billion to reflect low crude prices. The average price of Oxy’s oil fell about 61 percent to $23.17 per barrel in the second quarter, down from $58.91 per barrel the same period last year.

More: https://www.houstonchronicle.com/business/energy/article/Oxy-loses-8-4B-in-second-quarter-battered-by-15473733.php

[IsailedawayfromFR]

Recall this statement from Oxy:
Occidental says the deal can increase free cash flow by $3.5 billion over the next two years through synergies and capital reduction. The company will achieve those savings by applying logistics solutions and proprietary drilling software and modeling to Anadarko’s operations, says Hollub.
https://www.cnbc.com/2019/04/24/occidental-ceo-why-she-will-prevail-in-bidding-war-for-anadarko.html

In just a little more than a year, Oxy has now a single rig running in the Permian
Occidental’s Lone Permian Rig Shows Severity of Shale Bust
https://finance.yahoo.com/news/occidental-posts-6-6-billion-202207329.html

And now we see a drop in stock price of almost 70% , the dividend cut to almost nothing, and an $8 billion writeoff.

Where are those synergies, and how can you accomplish them with but one rig running, Oxy?

[IsailedawayfromFR]

And now Buffett has dumped them.

Buffett Takes Barrick Gold Stake, Dumps Goldman Sachs, Occidental Petroleum
https://finance.yahoo.com/m/b64ac494-796c-325f-9e68-79d96d5fa88f/buffett-takes-barrick-gold.html

[catfish1957]

And now Buffett has dumped them.

Buffett Takes Barrick Gold Stake, Dumps Goldman Sachs, Occidental Petroleum
https://finance.yahoo.com/m/b64ac494-796c-325f-9e68-79d96d5fa88f/buffett-takes-barrick-gold.html

BRKa / Buffett has now underperformed S & P  indexes of the past 1,3, or 5 years, that there are a lot of whispers in financial community that  Biden syndrome finally infiltrated the Sage's brain.

[Hoodat]

Chevron can now buy Oxy (and Anadarko) for less money than what they last bid for Anadarko.

[catfish1957]

Chevron can now buy Oxy (and Anadarko) for less money than what they last bid for Anadarko.

Good catch.  But the problem with big oil right now, is that they still have to cover their lofty dividends (6% (CVX)and 8% (XOM) yield at this exact moment) , no matter how big a bargain there is.  In fact both CVX and XOM are borrowing massively to do so.