© 2020 Forbes Media LLC. Hollub also made another widely criticized move in getting expensive preferred stock financing from Naturally, Uncle Warren’s dividend is unaffected by today’s announcement. Occidental Petroleum Corp., the oil producer that earlier this year slashed its dividend to a penny per share, plans to issue roughly 113 million warrants to holders of its common shares. The stock now yields 3.2% with the new dividend. The next Occidental Petroleum Corp. dividend is expected to go ex in 2 … “The Buffett deal was like taking candy from a baby and amazingly she even thanked him publicly for it,” Icahn wrote last year. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. The company also said that it would be cutting its 2020 capital spending to between $3.5 billion to $3.7 billion, from $5.2 billion to $5.4 billion. The company outbid Chevron Corp. last year to buy Anadarko Petroleum Corp., adding some $40 billion of borrowing in the process. Bill Featherstone, analyst with Credit Suisse, said in a note this afternoon that under the new capex budget Oxy will be unable even to maintain its production levels, roughly 1.3 million barrels of oil (and gas equivalents) per day. Raising that cash would have been tough even under the $55 oil prices seen in the fourth quarter, when the newly combined Oxy-Anadarko generated $1.2 billion in “adjusted” income (excluding some extraordinary expenses). Forbes reporter since 1999. Following the Anadarko deal, Occidental went from having one of the strongest balance sheets among its peers to one of the worst. Such a move would preserve cash for Occidental, but it would be dilutive to shareholders. Berkshire’s preferred dividends appear safe for now. The stock now yields 3.2% with the new dividend. Occidental Petroleum slashed its quarterly dividend by 86% on Tuesday, becoming one of the biggest casualties of the recent plunge in oil prices. Occidental cut its quarterly dividend in May to the lowest since at least the 1970s amid the pandemic-driven collapse in energy demand that has strained the oil explorer’s ability to manage its debt load. An error has occurred, please try again later. “These actions lower our cash flow breakeven level to the low $30s WTI, excluding the benefit of our hedges, positioning us to succeed in a low commodity price environment,” said Hollub. 10-Year Dividend History. Shares of Occidental (ticker: OXY), which plunged 53%, or $14.35, to $12.51 on Monday, were up 96 cents, at $13.47, in midday trading Tuesday. Chevron In two months Oxy shares have lost 2/3rds of their value. Also on Friday, Occidental sold $2 billion worth of high-yield bonds to push out its steep maturity wall. The current dividend yield for Occidental Petroleum as of October 16, 2020 is 0.40% . Surprising U.S. Recovery, Stimulus Talks, Strong China: Eco... Japan Pledges Net-Zero Emissions by 2050 Without Clear Roadm... Before it's here, it's on the Bloomberg Terminal. A fter a slide in oil prices and a tumble in its stock price, Occidental Petroleum cuts its dividend by 86% and says it will reduce capital spending. The stock now yields 3.2% with the new dividend. Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. Occidental’s bonds have also come under pressure lately with the company’s 4.4% bonds due in 2029 now trading around 70 cents on the dollar, down from above 100 cents in late February. T. Rowe Price, Occidental Petroleum announced today that it would slash its dividend on common shares from 79 cents per quarter to 11 cents, for an annual savings of $2.4 billion. What’s more, according to a note today from CreditSights, Oxy may not be able to generate as much cash from divestitures as hoped: “The war on shale, and related crude price selloff, also calls into question the $10-$15bn asset sale plan with OXY only closing $6.1bn to date.”. Berkshire held nearly 19 million shares at year-end after buying 11.5 million shares in the fourth quarter. Investors will get an eighth of a warrant for every share held and each warrant will entitle them to purchase one share at $22, the Houston-based company said in a statement. The stock closed Friday at $17.69. We've detected you are on Internet Explorer. Still, Hollub’s job could be in jeopardy because of the Anadarko fiasco. S&P 500 Heads for Its Biggest Rout in Seven Weeks: Markets W... Oil Falls With Dimming Stimulus Chances and Surging Virus Ca... Treasuries Gain Most in Weeks as Investor Optimism Takes a H... U.S. New-Home Sales Fell Slightly in September, Remain Eleva... Risks Abound for Emerging Markets in Final Week Before U.S.... Bank of Canada Already Pushing Limits of Domestic Bond Marke... Covid Cases Surge, ECB Asset Purchases Will Follow, China’s Feud With Bondholders Could Reset Debt Workout Rules. slashed its quarterly dividend by 86% on Tuesday, becoming one of the biggest casualties of the recent plunge in oil prices. Hollub argued the deal was so important to Occidental that the company couldn’t risk a potential rejection by holders. who called the action terrible corporate governance. S&P 500 Heads for Its Biggest Rout in Seven Weeks: Markets Wrap, Europe Steps Closer to Lockdown-Level Curbs in Italy and Spain, The 2021 Ferrari Roma Is the Most Perfect Ferrari on the Road Today, Time to Reset Expectations for World Economy With Virus Untamed, Cuomo Rips White House ‘Capitulation’; Europe Woes: Virus Update. And although today Oxy is up 10%, it’s only to $13.80 — a level not seen since 2002 (and a far cry from all-time highs above $100 in 2011). In a statement on Tuesday, Hollub said: “Due to the sharp decline in global commodity prices, we are taking actions that will strengthen our balance sheet and continue to reduce debt. Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. As Icahn said a month ago: “If ever there was a time for a CEO and board to be held accountable, it is now.” The legendary raider shaved his stake in Oxy to 22 million shares as of December, worth about $300 million now. https://www.barrons.com/articles/occidental-petroleum-slashes-dividend-by-86-51583860468. (BRK. Last April, when Hollub was desperate to secure financing for her takeover of Anadarko, she flew to Omaha. Mar 10, 2020 1:29PM EDT. The opportunity cost: growth. (CVX). CEO Vicki Hollub didn’t have much of a choice. The move will free up about $4 billion in cash per year for the beleaguered oil bellwether, which has sunk in value ever since acquiring Anadarko Petroleum for $57 billion last year. You may opt-out by, Carl Icahn Blasts Occidental CEO As 'Arrogant,' Preps Proxy Fight After $53 Billion Anadarko Takeover, EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change. The company paid investors $1.31 per share a decade ago. An oil well operated by Occidental Petroleum. The move won the support of one the company’s largest investor, Carl Icahn. Since Icahn’s letter Oxy shares not only fell by 66%, to levels not seen for nearly 20 years, but now they’ve been stripped of dividends. In 2021, $6.4 billion of Oxy’s $38 billion in debt comes due. Special stock dividend declared in February 2016 of the remaining 71.5 million shares of … Occidental’s balance sheet is stretched as a result of the debt incurred from its much-criticized $57 billion purchase of Anadarko Petroleum last year. A), which bought $10 billion of 8% preferred with warrants that cost Occidental $800 million annually. Dividend Summary. Hollub’s bet-the-company deal for Anadarko has proven to be an albatross given the sharp drop in oil prices. Review OXY dividend yield and history, to decide if OXY is the best investment for you. This allows Occidental Petroleum to issue cheap debt to expand operations and pay dividends. In an open letter to Oxy shareholders on February 12, Icahn reasserted his position that Hollub should be replaced as CEO for having “destroyed over $30 billion in stockholder value” with the Anadarko deal. She has overseen an 80% drop in the stock price since last April, when rumors surfaced that the company would seek to break up the deal that Anadarko had reached with These actions lower our cash flow break-even level to the low $30s WTI, excluding the benefit of our hedges, positioning us to succeed in a low commodity price environment.”. The yield is now about 6.5%. Instead the stock will now yield 3.1%. Occidental Petroleum Corp., the oil producer that earlier this year slashed its dividend to a penny per share, plans to issue roughly 113 million warrants to holders of its common shares. Buffett agreed to invest $10 billion of Berkshire Hathaway capital into Oxy, for which he got a chunk of Oxy preferred stock paying a dividend of $800 million per year — about double what all of Oxy’s common shareholders will get under the new dividend plan. Under its old payout schedule Oxy’s implied dividend yield was 23% at today’s price. That stake is now worth about $250 million, down from $775 million at the end of 2019. Oil prices, as measured by West Texas intermediate crude, were up $2.24, to $33.37 a barrel on Tuesday, but they are down by about 50% since last spring. Shares of Occidental (ticker: OXY), which plunged 53%, or $14.35, to $12.51 on Monday, were up 96 cents, at $13.47, in midday trading Tuesday. After lowering its quarterly dividend by 86% to $0.11 on March 10, Occidental Petroleum updated its dividend policy again on Friday, slashing it to almost zero. Occidental Petroleum announced today that it would slash its dividend on common shares from 79 cents per quarter to 11 cents, for an annual savings of … That is permitted under the agreement between the two companies. This copy is for your personal, non-commercial use only. Good thing for Hollub, she has Warren Buffett as something of a backstop. Now that West Texas Intermediate crude sells for $33/bbl, that income will be greatly diminished. Write to Andrew Bary at andrew.bary@barrons.com. More importantly, saving cash will help pay off its debt. Oxy will also reduce capital spending this year by about $1.7 billion. She succeeded in restructuring the agreement to avoid a shareholder vote, angering big holders like On May 9, 2019, Occidental Petroleum declared a quarterly cash dividend of $0.78. Barron’swrote on Monday that the lofty dividend was in jeopardy. One possibility raised by J.P. Morgan analyst Phil Gresh in a recent note is that Occidental could pay Berkshire in stock rather than cash.

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