Occidental's Anadarko Buy Yields 2019 Loss

Occidental Petroleum's acquisition of Anadarko Petroleum last year resulted in 2019 losses, the company reported late last week.

In an earnings release, the company stated it took a hit of $965 million in 2019, versus $4.1 billion in profit the year before. It had to shoulder over $1.3 billion in costs tied to its $38-billion purchase of Anadarko. The company also had a 4Q loss, versus a profit of $706 million during the same period the previous year. On a brighter note, revenue climbed $20.3 billion in 2019, up from 2018’s $17.8 billion.

Thanks to its mega acquisition, Oxy has been under fire since last year. Back in April, Chevron Corp. announced its $33 billion bid for Anadarko which was quickly trumped by Oxy’s bid—which was worth around 20 percent more to Anadarko’s shareholders. Oxy’s bid of $38 billion was secured by $10 billion in backing from Warren Buffet, Berkshire Hathaway’s CEO. Buffet's support enabled Vicki Hollub, Oxy CEO, to avoid the need to put the deal to a vote of her own shareholders.

Activist investor Carl Ichan was vocal in his opposition to the deal. In a November 2019 letter to shareholders he bluntly stated: “I have no faith in Hollub or her board, and even though I do believe that OXY owns good assets, I draw the line at exposing more than $1 billion to a CEO and board who have gambled the company to further, in my view, their own agendas – all at the expense of stockholders.”

On Feb. 27 Occidental shared plans to slash spending by almost 40 percent in 2020, and said it had repaid nearly 32 percent of the debt it raised for the Anadarko purchase.

Of its targeted $15 billion in asset sales, Hollub stated the company has sold off $10.2 billion so far.

“Deleveraging and returning excess free cash flow to shareholders remain key priorities, and we are highly confident in our ability to achieve both," Hollub said in a written statement.

E&P companies large and small have struggled under the weight of low commodity prices, coronavirus panic and a gas supply glut. Recently, oil prices plummeted in the worst week since 2008.

To contact the author, email bertie.taylor@rigzone.com.