Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

Equipment used to process carbon dioxide, crude oil and water is seen at an Occidental Petroleum project in Hobbs, N.M., on May 3, 2017.

Ernest Scheyder/Reuters

Occidental Petroleum Corp will write down the value of its oil and gas properties by up to $9 billion this quarter and restructure some debts to avoid a possible default, the company said on Thursday.

The U.S. oil producer is trying to shed nearly $40 billion in debt from its purchase of rival Anadarko Petroleum last year, an ill-timed bet on rising oil prices ahead of a historic market crash.

The latest writedown stems from declining energy demand amid the COVID-19 pandemic and global glut that has oil trading 38% below what it cost in January. Occidental and many of its peers dismissed workers and cut budgets by billions of dollars as energy markets fell.

Story continues below advertisement

Occidental plans to replace $9.12 billion in notes due in 2021 and 2022 and issue new notes that would remove provisions that could have pushed it into default.

Warren Buffett’s Berkshire Hathaway Inc, which last year bought $10 billion of Occidental preferred shares to help it finance the Anadarko deal, will receive a June 30 dividend in shares, Occidental said, to save cash.

With its share price down 57% year to date, Occidental must pay the dividend with increasingly more stock, giving Berkshire a growing stake in the company, said Houston energy economist Ed Hirs.

“There’s no clear horizon to anyone getting any value other than Buffett,” Hirs said.

Occidental and Buffett were not immediately available for comment.

Ratings firm Moody’s Investors Service on Thursday downgraded its rating on Occidental’s debt one notch to Ba2 and issued a “negative” outlook. Rival Fitch Ratings raised its rating on the notes to BB with a “stable” outlook.

The Anadarko purchase left Occidental “with over $35 billion of debt and $10 billion of preferred stock, compromising its financial flexibility to confront the collapse in oil prices,” said Andrew Brooks, a Moody’s vice president.

Story continues below advertisement

This will be the third consecutive quarter in which Occidental takes a writedown, bringing the total to as much as $12 billion in the last nine months, more than half of its market capitalization.

The oil price crash has other oil and gas companies chopping the value of their assets. The industry’s total reductions could reach $300 billion starting this quarter, according to accounting and consulting firm Deloitte.

Occidental recently set a July 1 deadline to accept bids for properties in Wyoming and Colorado that could bring up to $700 million.

“So far the only successful divestitures were some of the LNG assets in Mozambique,” said Espen Erlingsen, an analyst at Rystad Energy.

The company needs to complete asset sales, which remain “challenging in the current environment,” said Jennifer Rowland, analyst with Edward Jones. “They’ve put themselves in a tough situation and have a long way to go to get themselves back in a healthy position, especially if oil prices stay low for longer.”

It cut its quarterly dividend last month to just a penny per share after having slashed it 86% in March to save cash.

Story continues below advertisement

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies