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Occidental Petroleum will cut certain employee salaries by 30 percent in response to the steep drop in oil prices, Reuters reported, citing an internal document. CEO Vicki Hollub will see her compensation cut by 81 percent, the memo showed.
The shale oil major, which last year acquired Anadarko, is the largest oil producer in the Permian, but with plummeting prices, its production costs now exceed the benchmark WTI, which has slumped to less than $24 a barrel.
Debt is also a problem. Oxy agreed to pay $55 billion in cash for Anadarko, which saddled it with total debt of $39 billion. Its shares have shed 75 percent since the start of the price war, and Moody’s last week downgraded its bonds to junk status.
Oxy planned to sell $15 billion worth of assets to pay down the debt, but these plans have run into delays and obstacles, and now, with the oil price crash, offloading them might prove an arduous task.
“During this unprecedented time impacting our industry, and the global economy, we’re taking aggressive actions to ensure the health of the company while protecting jobs,” spokeswoman Melissa Schoeb said in a statement quoted by Reuters.
“We notified our employees of a number of measures we will be implementing, including compensation reductions, which will impact everyone at the company starting with the management team,” Schoeb also said.
The salary cut will concern employees who earn more than $76,000 a year.
Earlier this month, in response to the price funk, Occidental cut its spending plans by $1.9 billion and scaled back dividends, expecting to save some $4.1 billion to $4.3 billion annually, Reuters reported.
Occidental is far from the only one cutting expenses. Across the U.S. oil industry, companies have already announced spending cuts that average 30 percent, according to Reuters data, and many expect curtailed production. The international list of spending cutters includes supermajors such as Exxon, Chevron, Shell, Total, and Eni.
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.