|
|
|
|
||
Occidental Stock Rises Because the Company Is Cutting Spending Even MoreOccidental Stock Rises Because the Company Is Cutting Spending Even More Salzman, Avi.Barron's (Online); New York (May 6, 2020). Occidental Petroleum, which loaded up on debt right before the bottom fell out as a result of the coronavirus pandemic , is in a world of hurt. But its latest earnings report , released late on Tuesday, impressed investors, and the stock rose 3.5% in early trading on Wednesday. Occidental (ticker: OXY) posted a loss per share of 52 cents, ahead of analysts' expectations for a 63-cent loss. Revenue of $6.4 billion was also ahead of expectations for $5.2 billion. But Wall Street's positive reaction may have more to do with Occidental's spending plans. The company further cut its capital budget and reduced operating expenses for the year. Occidental has now cut 2020 capital expenditures three times. On Tuesday it said it expects to spend $2.4 to $2.6 billion, which is 53% below original guidance and another $300 million below its last estimate from March, notes Credit Suisse analyst William Featherston. It also announced an additional $1.2 billion in expected operating and corporate cost savings. Occidental otherwise withdrew its guidance for the rest of the year, given the current uncertainty in the oil market. SunTrust Robinson Humphrey analyst Neal Dingmann writes that the company will need to sell a substantial amount of assets to help its balance sheet. That won't be easy at a time when most oil-and-gas companies are cutting back and may not be looking to spend a lot of money on new assets. Occidental bought Anadarko Petroleum last year, expanding its oil and gas holdings considerably. But the company's debt load expanded, too. Its long-term net debt was $36 billion at the end of the quarter, up from $10 billion a year ago. The Wall Street Journal reported on Tuesday that Occidental has hired a bank to advise it on possible ways to reduce its debt burden, including buying back some of the company's bonds or pushing debt maturities back with an exchange offer. The company declined to comment. Occidental will hold a conference call with analysts starting at 11 a.m. ET. |
return to message board, top of board |