Occidental Petroleum Hit Its $4.5 Billion Debt Reduction Target 7 Months Early. That's Paying Big Dividends for Investors.
Occidental Petroleum (NYSE: OXY) unveiled a very bold move at the end of 2023. The oil producer agreed to buy CrownRock for $12 billion to bulk up its position in the oil-rich Permian Basin. A notable aspect of the deal was Occidental's funding strategy, which relied heavily on debt (it issued $9.1 billion of new debt while also assuming $1.2 billion of CrownRock's existing debt). That approach differed from the all-stock deals favored by its bigger rivals.To keep the pressure off its balance sheet, Occidental pledged to pay off $4.5 billion of debt within 12 months of closing the deal, which occurred in August. The oil company worked quickly and achieved its target seven months ahead of schedule. That will save it a lot of money in interest, allowing it to return more cash to shareholders through a higher dividend.On the fourth-quarter conference call, CEO Vicki Hollub dove into the factors enabling Occidental Petroleum to reduce debt rapidly. She stated, "Through a combination of asset sales and organic cash flow, we achieved our near-term debt repayment target of $4.5 billion seven months ahead of schedule."Continue reading
Occidental Petroleum (NYSE: OXY) unveiled a very bold move at the end of 2023. The oil producer agreed to buy CrownRock for $12 billion to bulk up its position in the oil-rich Permian Basin. A notable aspect of the deal was Occidental's funding strategy, which relied heavily on debt (it issued $9.1 billion of new debt while also assuming $1.2 billion of CrownRock's existing debt). That approach differed from the all-stock deals favored by its bigger rivals.
To keep the pressure off its balance sheet, Occidental pledged to pay off $4.5 billion of debt within 12 months of closing the deal, which occurred in August. The oil company worked quickly and achieved its target seven months ahead of schedule. That will save it a lot of money in interest, allowing it to return more cash to shareholders through a higher dividend.
On the fourth-quarter conference call, CEO Vicki Hollub dove into the factors enabling Occidental Petroleum to reduce debt rapidly. She stated, "Through a combination of asset sales and organic cash flow, we achieved our near-term debt repayment target of $4.5 billion seven months ahead of schedule."
