• 2 minutes U.S. Presidential Elections Status - Electoral Votes
  • 5 minutes “Cushing Oil Inventories Are Soaring Again” By Tsvetana Paraskova
  • 7 minutes United States LNG Exports Reach Third Place
  • 3 hours Joe Biden's Presidency
  • 1 day https://www.prageru.com/video/whats-wrong-with-wind-and-solar/
  • 9 hours The World Economic Forum & Davos - Setting the agenda on fossil fuels, global regulations, etc.
  • 1 day Is the Chinese CCP Following the Left's Leadership, or the Left Following the CCP's?
  • 1 day Here it is, the actual Complaint filed by Dominion Voting Machines against Sydney Powell
  • 2 hours An exciting development in EV Aviation: Volocopter
  • 5 hours Did I Miss Something?
  • 3 hours The Debate Starts : Remake Republican Party vs. Third Party
  • 10 hours Minerals, Mining and Industrial Ecology
  • 1 day CNN's Jake Tapper questions double amputee purple heart recipient GOP Rep's commitment to democracy. Tapper is a disgrace.
  • 8 hours A Message from President Donald J. Trump - 5 minutes from The White House directly
  • 1 day 'Get A Loan,' Commerce Chief Tells Unpaid Federal Workers
  • 2 days Do Republicans like Liz Cheney, Adam Kinzinger, Mitt Romney and now McConnell think voting for Impeachment can save the party ? Without Trump base what is the Republican constituency ? It's over.
Josh Owens

Josh Owens

Josh Owens is the Content Director at Oilprice.com. An International Relations and Politics graduate from the University of Edinburgh, Josh specialized in Middle East and…

More Info

Premium Content

Is This The Worst Oil Deal Of The Decade?

On the 8th of August 2019 a major oil company completed an acquisition that could well be looked back on as the worst oil deal of the decade. Since that day, the company’s stock price has crashed 85 percent and hit its lowest level since 2001.

The deal, of course, was Occidental Petroleum’s acquisition of Anadarko Petroleum.

This megadeal, valued at $55 billion, pitted two of the world’s most famous investors against each other. Warren Buffet, who backed the deal with a $10 billion pledge, found himself in disagreement with billionaire activist investor Carl Icahn who attempted to stop the merger from going ahead.

It is now clear that Buffett got this one badly wrong in what is turning out to be his worst mistake since merging Heinz with Kraft Foods in 2015. Icahn has since written an open letter to Occidental shareholders suggesting that the company’s top management only moved ahead on the acquisition as a defensive manoeuvre to stop a potential takeover of Oxy itself. He claimed that the CEO and some board members had “gambled the Company to further their own agendas – all at the expense of stockholders.”

So far this year, the coronavirus outbreak and the breakdown of the OPEC+ alliance have sent oil prices crashing, making the merger of Anadarko and Occidental an even more worrying prospect for shareholders. The last thing that oil companies need in this low oil price environment is large amounts of debt, and that is exactly what OXY has been left with. The company sold billions in bonds to fund the acquisition, and the value of those bonds have now crashed.

As of Tuesday, it seems that CEO Vicki Hollub runs Occidental Petroleum in name only. The company was forced to cut its dividend by more than 80 percent, something that she had promised to defend. Warren Buffett’s $10 billion investment is now almost equivalent to Occidental’s market capitalization, which means he accounts for almost half of its equity value. Related: The Oil Price War Has Only Just Begun

So how did it all go so wrong for Occidental CEO Vicki Hollub? Is there any way back for this once great oil giant? And should shareholders hold on?

In answer to the first question, we will have to wait and see. If Carl Icahn’s accusations are correct then it would mean a determination to protect her job blinded her to the dangers of the deal.

As for the second question, it seems that Occidental Petroleum’s best path back may well come in the form of a takeover – possibly from Chevron, the company that it outbid for the original Anadarko deal.

Finally, when it comes to where shareholders should put their money… well there are probably better places than an indebted oil major with an apparent power struggle taking place in the board room.

By Editorial Department for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Jamie Swanson on March 19 2020 said:
    Don't see how this is a disaster for Buffet, a disaster would have been buying $10 billion of shares.
    He is now in a very strong position within a company that must be a takeover target. He's in a position to actually buy them out himself.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News