Occidental Petroleum Corp. reported Tuesday that its board of directors has approved an 86-percent reduction in the company’s quarterly dividend – from $0.79 per share to $0.11 per share – effective July 2020.
In addition, Oxy stated that it will cut its 2020 capital spending to between $3.5 billion and $3.7 billion. The new figures represent a roughly one-third cut to the company’s capex budget for this year. Previously, the firm had planned to spend from $5.2 billion to $5.4 billion.
Oxy also noted on Tuesday that it will “implement additional operating and corporate cost reductions” but did not elaborate.
“Due to the sharp decline in global commodity prices, we are taking actions that will strengthen our balance sheet and continue to reduce debt,” Occidental President and CEO Vicki Hollub commented in a written statement emailed to Rigzone. “These actions lower our cash flow breakeven level to the low $30s WTI, excluding the benefit of our hedges, positioning us to succeed in a low commodity price environment.”
Tuesday’s statement confirms a Bloomberg report that appeared on Rigzone Monday anticipating dividend and capex cuts from Oxy. The news agency, which cited unnamed sources, pointed out that Oxy is particularly sensitive to declining oil prices among large shale producers given its high debt load. Moreover, the article references a recent conference call in which Hollub advised that spending cuts might be necessary.
To contact the author, email mveazey@rigzone.com.
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