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Occidental Expects $1.7B Impairments In Q4

Scoop rig

Occidental Petroleum expects to book around US$1.7 billion in impairments and costs for the fourth quarter of 2019 when it reports results later this month, the company said on Tuesday, attributing the charges to the sale of a stake in a gas pipeline operator and to the acquisition of Anadarko last year.

Oxy, which will announce its Q4 2019 results after market close on February 27, expects the fourth-quarter income to be impacted by pre-tax charges related to the Anadarko acquisition and other items affecting comparability, the company said in a filing to the SEC today.

Occidental expects to book US$1 billion worth of impairment and other charges for its investment in gas pipeline operator Western Midstream Partners, as well as another US$655 million in costs related to the acquisition of Anadarko, including employee-related severance and other integration-related costs.

Those charges and costs would be partially offset by a US$475-million net gain from the transfer of Midland basin assets to its joint venture with Colombia’s Ecopetrol, and a gain of US$84 million from derivatives and warrants.

Oxy bought Anadarko Petroleum last year in one of the biggest oil industry deals in recent years, and said last month that it would cut its majority interest in Western Midstream Partners to below 50 percent by the end of this year in order to trim some of its debt that it took on during the acquisition.  

Last month, Occidental was reported to have started layoffs across the United States in a drive to further cut costs after the acquisition of Anadarko. Oxy had already cut jobs in a voluntary exit program, but it has now moved to broad layoffs from Denver to the Permian, according to the Houston Chronicle.

By Tsvetana Paraskova for Oilprice.com

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