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Occidental Petroleum will cut spending for 2020 by 40 percent, the company said during its third-quarter earnings call, after it reported a net loss for the first quarter after its acquisition of Anadarko.
This means Oxy will spend some $5.3-5.5 billion versus $9 billion budgeted for this year. The company booked a net loss of $912 million for the third quarter of the year, down from a profit of $1.87 billion for the same period of 2018.
Oxy’s management is facing heat from investors, led by Carl Icahn, who disapprove of its acquisition of Anadarko. Occidental offered $33 billion for Anadarko plus the assumption of $15 billion in debt, beating Chevron’s offer.
The tie-up angered Carl Icahn, who started an offensive against the management, proposing the replacement of four members of the board of directors in a bid to prevent future deals of the magnitude of the Anadarko takeover.
According to the activist investor, Oxy should have focused on asset sales to shrink debt rather than on growth through acquisitions.
Yet, according to the engineers of the deal, it will cement and expand Occidental’s position as the largest oil producer in the Permian after it incorporates Anadarko’s acreage, which comes in at some 600,000 acres gross in the Delaware Basin, part of the largest shale play.
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“We remain committed to the strategy we laid out to our investors, which focuses on deleveraging and returning excess free cash flow to shareholders,” CEO Vicky Hollub said in a statement with the release of the third-quarter results.
The company has already fulfilled some of its promises that accompanied the acquisition. During last quarter, Oxy sold its Mozambique operations for $3.9 billion and its stake in Plains All American for $650 million. The company also said it had repaid $4.9 billion in debt, including all debt maturing in 2020.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.