Occidental Petroleum said on Friday it lost $965 million (1.22 a share) after amassing $1.3 billion in costs from $38 billion Anadarko acquistion
February 28, 2020
Warren Buffett is credited with that old saying about receding tides and embarrassed skinny-dippers. In Occidental Petroleum Corp.’s case, the lack of swimwear is one problem, but so is the anchor tied around its ankle. Part of that anchor is the old sage himself.
Oxy, as it is known, just reported results for its first full quarter since acquiring Anadarko Petroleum Corp. In that bruising takeover battle against Chevron Corp., Berkshire Hathaway Inc. provided a crucial $10 billion check allowing Oxy to avoid a shareholder vote. It came at a steep cost of, among other goodies, an 8% preferred dividend. As it turns out, that was more than enough to swallow Oxy’s adjusted net income for the second half of 2019 before any of it could trickle down to the commoners.
Buffett didn’t get rich by giving stuff away, so the fact Oxy went to him in the first place signaled just how far it was stretching. Back then, things looked dicey already on the trade-war front. But in early 2020, Oxy finds that not only has the tide gone out, it has gone way out, similar to what happens just before a tsunami floods back in. The tsunami is the coronavirus crisis, swamping an already fragile oil and gas market.
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