|Bid||14.12 x 3200|
|Ask||14.14 x 1100|
|Day's Range||13.67 - 14.23|
|52 Week Range||9.00 - 54.05|
|Beta (5Y Monthly)||2.02|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||0.44 (3.11%)|
|Ex-Dividend Date||Mar. 09, 2020|
|1y Target Est||N/A|
The oil price collapse is forcing potential buyers of oil and gas fields to try and renegotiate deals or otherwise abandon them entirely
Occidental Petroleum's (NYSE: OXY) deal to sell its assets in Ghana to French oil giant Total (NYSE: TOT) has unraveled. Total called off the planned transaction after it wasn't able to acquire Occidental's assets in Algeria, which was a condition of the deal. Occidental initially planned to flip its entire African portfolio to Total following its acquisition of Anadarko Petroleum for $8.8 billion.
The Zacks Analyst Blog Highlights: EOG Resources, Occidental Petroleum, ExxonMobil, Chevron and BP
Total has called off a plan to acquire Occidental Petroleum's assets in Ghana, which was conditional on the completion of the acquisition of Occidental's other assets in Algeria, the French energy company said on Monday. The deal was part of an $8.8 billion (7.2 billion pounds) agreement reached between Total and Occidental to over Anadarko's assets in Mozambique, Ghana, Algeria, and South Africa.
Occidental Petroleum's (NYSE: OXY) ambitious plan to pay off the debt it took on to acquire Anadarko Petroleum has encountered many obstacles. Not only has it been unable to close some asset sales, but plummeting crude oil prices took asset values with them, which will make it impossible to achieve the company's target. Occidental Petroleum initially anticipated that it could net $15 billion from selling assets following the acquisition of Anadarko Petroleum.
Fracking activity in the U.S. has plunged as a result of ultra low oil prices and covid-19, and the number of operations may hit rock bottom in May 2020
(Bloomberg) -- As it headed toward bankruptcy, Diamond Offshore Drilling Inc. took advantage of a little-noticed provision in the stimulus bill Congress passed in March to get a $9.7 million tax refund. Then, it asked a bankruptcy judge to authorize the same amount as bonuses to nine executives.The rig operator is one of dozens of oil companies and contractors now claiming hundreds of millions of dollars in tax rebates. They are employing a provision of the $2.2 trillion stimulus law, called the CARES act, that gives them more latitude to deduct recent losses.“This is a stealth bailout for the oil and gas industry,” said Jesse Coleman, a senior researcher with Documented, a watchdog group tracking the tax claims. It’s geared to companies “that have been losing money over the last few years -- and now they get that money back as a check from the taxpayers. That’s exactly what the oil industry has been doing.”The change wasn’t aimed only at the oil industry. However, its structure uniquely benefits energy companies that were raking in record profits in 2018 as crude prices reached $76.41 per barrel, only to see their fortunes flip a year later.More than $1.9 billion in CARES Act tax benefits are being claimed by at least 37 oil companies, service firms and contractors, according to a Bloomberg News review of recent filings with the Securities and Exchange Commission. Besides Diamond Offshore, which declined to comment, recipients include oil producer Occidental Petroleum Corp. and refiner Marathon Petroleum Corp.Other oil companies say they didn’t lobby Congress for the change, which is widely available across all industries. “We did not request any benefit, but we are obligated to follow the tax laws as passed by Congress, which apply to all corporate manufacturers nationwide,” said Jamal Kheiry, a spokesman for Marathon, which got a $411 million benefit.Congress embedded the tax change governing losses in the stimulus measure early on, as lawmakers moved rapidly in March to steer trillions of dollars in aid to coronavirus-ravaged workers and companies. Alongside expanded unemployment payments and payroll loan programs, lawmakers saw an opportunity to harness the tax code to help get cash flowing to companies struggling to pay rent, workers and insurance.It “was sold as help for the little guy -- help for small business,” said Steve Rosenthal, a senior fellow with the Urban-Brookings Tax Policy Center. “In the name of ‘small business,’ we’re shoveling out billions of dollars to big corporations and rich guys.”The provision loosened rules governing how businesses deduct net operating losses -- incurred when deductible expenses exceed gross income. For years, companies were able to apply those net operating loss deductions to previous tax returns as well as going forward -- but Congress ruled out retroactive relief as part of the 2017 tax cut law.That new forward-focused approach works well when the economy is expanding, but the promise of using today’s losses as tomorrow’s deductions isn’t much help to coronavirus-battered companies with no guarantee they will survive long enough to claim them. So in the stimulus package, Congress gave businesses the chance to carry back all their losses -- and claim immediate tax refunds -- or five years from 2018, 2019 and 2020.“The thought was temporarily we should bring them back so that firms that are seeing significant losses in the next year or over the past year or two can carry those back and get some short-term liquidity,” said Garrett Watson, a senior policy analyst at the Tax Foundation, a non-profit that supports pro-growth tax policies.Traditionally, the ability to deduct net operating losses is meant to ensure companies get fair tax treatment even amid volatility, Watson said -- a plus for the notoriously boom-and-bust oil industry. “You are going to see the biggest benefits for firms like oil and gas that are seeing volatile profits -- and now, of course, extreme losses,” he said.The combination of big losses now and the congressional tax changes mean it may be years before some oil companies have to pay corporate income taxes at all.“We’re going to have some large losses this year,” ConocoPhillips Executive Vice President Don Wallette said in an April 30 earnings call. The company is in “a zero-tax-paying position in the U.S. and expect to remain there for quite some time,” Wallette said.There’s no limit on how the new refunds can be used -- and even bankrupt firms can get them.Consider Diamond Offshore. Once one of the world’s largest drilling rig contractors, it filed for Chapter 11 bankruptcy protection on April 26 after crude prices plunged along with demand for its high-tech drillships.In a first quarter filing, Diamond, which is majority owned by Loews Corp., said it had recognized a tax benefit of $9.7 million as a result of the carryback change. In an emergency motion filed with a federal bankruptcy court May 1, the company asked for the freedom to dole out $16.7 million in cash incentives to 85 of its 2,300 full-time employees, including as much as $9.7 million for nine senior executives.The company said at the time that deteriorating market conditions and the collapse of Diamond’s stock had made its existing equity-based bonus program “largely worthless.” The tax filing did not specify how the $9.7 million would be used.Dozens of other oil businesses have reported reaping the benefits, including $55 million for Denver-based Antero Midstream Corp., $41.2 million for supplier Oil States International Inc. and $96 million for Oklahoma-based producer Devon Energy Corp.Occidental Petroleum, which enlisted its employees to ask Congress to “provide liquidity to the energy industry,” said it now anticipates a cash refund of about $195 million as a result of the carryback provision and a separate change in the stimulus bill that allows the immediate refund of unused alternative minimum tax credits. An Occidental spokesperson declined to comment.Millions in RefundsNational Oilwell Varco Inc., a manufacturer of oil and gas equipment, expects a $123 million refund by carrying back its 2019 losses and applying them to its 2014 tax filing.San Antonio-based refiner Valero Energy Corp. recognized an extra $110 million by carrying back losses to 2015 -- when the corporate tax rate was 35% instead of the current 21%.Valero spokeswoman Lillian Riojas said that is tied to tax losses generated in the first quarter, since the company did not generate a net operating loss for federal income tax purposes in 2018 or 2019. And she said the actual refund will be dependent “not only on the company’s performance for the remainder of the year, but also on the impact” of other tax provisions.The benefits are “turbo-charged,” said Rosenthal, with the Urban-Brookings Tax Policy Center. That’s because businesses can carry back losses to offset income at a higher corporate tax rate of 35%, before the 2017 tax cut law lowered it 14 points. “Getting those losses at 35% is very, very favorable -- especially in 2020 when the losses are going to be devastatingly large.”The filings themselves reveal only part of the picture. Private companies are able to generate tax refunds too -- without disclosing it to the SEC. And while some public companies said they benefited from the tax break, they didn’t reveal by how much.For instance, refiner Phillips 66 boasted an effective income tax rate of just 2% for the first quarter -- well below the federal statutory income tax rate of 21% -- partly because of the carryback. But the company did not specify the amount of its expected refund.Dennis Nuss, a spokesman for Phillips 66, declined to comment when reached by phone Thursday. Representatives for Oil States, National Oilwell Varco, Antero and Devon didn’t respond to messages seeking comment.The importance of the provision hasn’t been lost on President Donald Trump’s administration. Energy Secretary Dan Brouillette recommended oil companies consider taking advantage of the expanded deduction in an April 21 interview with Bloomberg TV, calling it one of several “important liquidity tools that are going to help the industry.”Congressional tax analysts initially estimated that the expanded loss carryback provision would cost $25 billion over 10 years -- just when used by corporations. Now, some are questioning whether the final pricetag could be much higher, and Democrats are seeking to limit the value of the tax break after raising concerns it overwhelmingly helps corporations and the wealthy.In a new stimulus bill advanced Tuesday, House Democrats proposed scaling back the provision so companies could only apply losses back to 2018. Their plan also would prevent companies with “excessive” executive compensation or stock buybacks from claiming the tax break -- a change that would be retroactive back to March.Rosenthal stressed that it was logical for Congress to help businesses that were profitable before the pandemic. “But the CARES Act goes too far, tilting its benefits overwhelmingly to the wealthiest Americans,” he said in an essay. “I think Congress did not know the extent of what it was doing.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Occidental bet heavily on the continued growth in U.S. shale oil, taking on heavy debts for its controversial purchase of Anadarko Petroleum last year for $38 billion. Energy companies worldwide, including Exxon Mobil Corp and Royal Dutch Shell PLC , have slashed capital expenditures and oil output to reckon with the pandemic. Houston-based Occidental last week posted a $2 billion (1.6 billion pounds) quarterly loss and has slashed capital spending drastically to shore up its balance sheet.
Despite the highest rate of unemployment since the great depression, oil prices continued to rally on some positive news from the U.S. and China
Image source: The Motley Fool. Enable Midstream Partners LP (NYSE: ENBL)Q1 2020 Earnings CallMay 6, 2020, 10:00 a.m. ETContents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks: OperatorGood day and welcome to the Enable Midstream Partners First Quarter 2020 Conference Call and Webcast.
The S&P 500 and the Dow fell on Wednesday as declines in financials and defensive groups countered gains in tech shares and as data showed U.S. private employers laid off 20 million workers in April, underscoring the economic fallout of the coronavirus outbreak. The tech-heavy Nasdaq ended higher, although indexes pulled back late in the session especially after U.S. President Donald Trump said China may or may not keep a trade deal between the two countries. Only two of the 11 major S&P sectors were positive, with tech leading.
The S&P 500 and the Dow fell on Wednesday after U.S. President Donald Trump cast doubt on a trade deal with China and data showed U.S. private employers laid off 20 million workers in April, underscoring the economic fallout of the coronavirus outbreak. The tech-heavy Nasdaq ended higher, although indexes pulled back late in the session after Trump said China may or may not keep the trade deal.
Shares of Occidental Petroleum(NYSE: OXY) tumbled more than 10% by 3 p.m. EDT on Wednesday. Weighing on the oil company were its weak first-quarter results and its struggles to manage its lofty debt load amid crashing crude oil prices. Occidental Petroleum posted a steep loss during the first quarter.
Algeria has agreed to maintain Anadarko's contract with state firm Sonatrach, and Occidental Petroleum Corp will continue investment in the OPEC member country, the energy ministry said on Wednesday. Algeria has blocked Occidental Petroleum's deal to sell Anadarko assets in the country to France's Total . Occidental Petroleum has informed the ministry of its new strategic approach and its "commitment to continuing Anadarko Algeria Corporation activities in Algeria," and it will seek new partnership opportunities, the statement said.
Occidental's (OXY) first-quarter revenues surpass the Zacks Consensus Estimate. The company withdraws its 2020 guidance on account of market disruption caused by COVID-19.
(Bloomberg Opinion) -- A lot has happened since May 5, 2019. That was a busy day for Occidental Petroleum Corp. First, it announced a deal worth almost $9 billion to sell a package of African assets to Total SA, on the proviso that Oxy gained control of Anadarko Petroleum Corp. (which owned said assets). Then Oxy raised its offer for Anadarko, using the $10 billion raised by selling preferred stock to Berkshire Hathaway Inc. in a hurried negotiation with Warren Buffett. The higher bid, together with the fact that Buffett’s money allowed Oxy to sidestep a vote of its own shareholders, clinched it.On May 5, 2020, Oxy reported a quarterly loss of $2.2 billion and withdrew annual guidance. Also, news emerged it had hired a bank to help cut its debt load, as reported by The Wall Street Journal. Meanwhile, Total, hosting its own earnings call that day, indicated completion of the Algerian and Ghanaian parts of that African deal was not exactly imminent. On Wednesday, Oxy’s 10-Q filing confirmed the Algerian deal is effectively dead and the Ghanaian one in limbo. Like I said, a lot’s happened.M&A is all about the income statement; how cost savings mean 1+1=3 for the bottom line. But off-stage, the balance sheet is doing the heavy lifting. Oxy’s experience of the past 12 months is destined to be a case study in what happens when the balance sheet gets stressed and ends up having a meltdown on center stage.Oxy took a risk with Anadarko, and Covid-19 is its unforeseen nemesis. Hence, Oxy is pulling every lever to conserve cash. Dividends to common shareholders have been slashed by 86%. Buffett’s $200 million-per-quarter coupon is being paid in new shares rather than cash. Now the capital expenditure budget has been cut, again, to less than half what was laid out three months ago. Further cost savings are promised.Altogether, it may be enough to keep Oxy’s balance sheet running in place but not to lose weight anytime soon. Adding the incremental savings to existing consensus estimates(2) implies Ebitda (as a proxy for cash flow) of roughly $4 billion through the rest of the year. Interest, dividends and capex take about $2.6 billion of that (assuming Buffett keeps getting new stock every quarter). The resulting free cash flow helps, but would still imply Oxy ending the year with leverage above 5 times Ebitda, or about 6.5 times with the preferreds. On Wednesday’s call, Oxy mentioned $2 billion of potential disposals in the near future. If they happen this year, they would take those multiples down slightly. Even a utility would feel uncomfortable with those numbers — and an oil company in the middle of a pandemic is no utility(3). One option for those hired bankers to consider is capitalizing on the bond sell-off by persuading Oxy’s creditors to swap their unsecured paper below face value for secured bonds. Charles Johnston of CreditSights, an analytics firm, estimates a $10 billion exchange at 65 cents on the dollar could shrink the pile by $5 billion, taking leverage to about 4.4 times at year-end (based on my numbers above)(1). That would still be very high but an improvement, especially if some semblance of stability entered the oil market later this year.There’s a catch, though. Creditors being asked to take a haircut to par value might look at Oxy’s current market cap of almost $13 billion and wonder why more of the pain shouldn’t fall on equity holders. As it is, CreditSights estimates asset coverage for Oxy’s creditors of just over $51 billion under a “high-case” scenario — implying residual equity value of less than $5 billion.This is why, despite Oxy’s progress on cutting costs, the sheer size of the balance sheet makes its stock — and lately its bonds — options on oil-price recovery. Even before Covid-19’s arrival, that was not a hot ticket among energy investors, who have realized the oil option often doesn’t pay off for them. Now, with Oxy’s maturities wall looming, potentially tough negotiations with creditors beckon amid a fragile oil market. The world has changed a lot for oil producers this past year, but for Oxy more than most. The next 12 months don’t promise much respite. (1) Clearly, these are very much subject to change given volatileoil prices and Oxy's suspension of guidance.(2) In terms of liquidity, Oxy also faces a wildcard in the form of 2036 bonds that are putable to the company in October. This may require almost$1 billion of refinancing depending on what bondholders decide to do..(3) Adding in preferreds, it would drop from 6.5 times to 5.8 times. Assuming $2 billion of disposal proceeds would take the implied multiples down to 4.1 without preferreds and 5.5 times all in, using my numbers.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.