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Occidental Petroleum reported a net loss of $8.4 billion for the second quarter of the year, becoming the latest oil company to suffer the combined effect of low oil prices and low demand caused by the Saudi price war and the coronavirus pandemic.
Like most other oil companies, Oxy booked impairment charges in Q2 on its oil and gas assets because of the slump in oil prices. These came in at $6.6 billion. Of this, $5.2 billion in impairments was booked on continuing operations and the remainder on discontinued operations.
After last year finalizing what was perhaps one of the most ill-timed acquisitions in history, Occidental now plans to continue cutting production to weather the effects of the crisis. Anadarko’s new owner said it plans to produce 13 percent less oil this quarter than last, and cut production by another 5 percent in the final quarter of the year. In the Permian, where Oxy is now the largest player thanks to the Anadarko acquisition, the company will slash production by 37 percent this year from last.
Occidental has a debt load of some $40 billion, most of which it took on last year when it bought sector player Anadarko in what now many see as one of the worst-timed acquisitions in history, finalized just months before oil prices tanked. About $11 billion of this debt matures by 2022, and the company is actively seeking ways to conserve and generate cash.
The acquisition cost Oxy some $55 billion and was aimed at expanding its presence in the U.S. shale patch, which got battered by the oil price crash. Because of the unfortunate timing of its acquisition of Anadarko, Oxy has become one of the worst-affected oil players in the United States. It has sought to sell assets to reduce its debt load, but this is tricky during a crisis as regardless of their quality with few buyers willing to invest in a depressed industry, prices will not be what they could have been under other circumstances.
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.