Thread regarding Occidental Petroleum Corp. layoffs

"It's not rumor mill" I beg to differ. SeekingAlpha will let any id–t contribute, even me! LOL Seriously, the information on there is even less reliable than on this board, and that is saying a lot.

@4haa, I'm not sure I follow your comment. The statement below was that Anadarko was rumored to be an acquisition target for many years by Exxon, and it never happened. So if Exxon never pulled the trigger on Anadarko before, why would Exxon pull the trigger on a higher cost (in terms of debt) and lower valued (in terms of market cap) Oxy today? So I completely follow that logical comparison. I'm not sure if it will hold, but it makes sense to me. Whatever shape Oxy was in prior to the acquisition is completely irrelevant, as they weren't an acquisition target at that time, and were the purchaser.

@1duu+15KXltnk Your comparison between pre-merger APC and Oxy now is irrelevant. Oxy was in better financial shape when compared to APC leading up to the merger.

The article makes some good points but fails to look at Exxon’s past strategies and behaviors.

Exxon realizes that their CAPEX and OPEX structure is higher than Oxy’s. Their processes and procedures, methodical/detailed approach to everything, greater overhead, higher level of HES emphasis, etc. drive costs into the system. Years past, they had Apache operate some of their assets and they would have partners like Amoco (when they existed) drill wells in joint venture properties. Even more recently, the kept a lot of the XTO assets separately to maximize their profits. Exxon would have to account for this if there was an acquisition.

Next, Oxy has lots of marginal wells in west Texas in old water flood and CO2 flood which are a huge future plugging liability.

To offset the item above (Plugging liability) and kick that can down the road, Exxon may follow Oxy’s strategy of rampIng up efforts to get taxpayers to pay for carbon capture and then use these wells as CO2 sequestering. But until now, Exxon hasn’t thrown their weight behind that strategy. They may change their mind.

Environmental liabilities. Oxy has done a good job of managing environmental liabilities and complying with regulatory requirements even when acquiring production from less rigorous companies. However, if an Exxon were to take them over, they have deeper pockets and a bigger target on their back; the environmental regulations might tighten and more governments and people might come after them. Exxon has been exiting similar type older properties in the Permian Basin for years.

However, if Oxy were to try and sell ME and GOM assets, I feel that Exxon may have some interests in them.........more an interest to buy the assets and not all of Oxy.

You're wasting your time dreaming about anyone buying oxy outside of bankruptcy. Not saying oxy will be bankrupt, but it is too expensive and debt heavy to be bought. Would be smarter to buy other permian players or wait and maybe ch11 happens.

Rumors for 10 years were that XOM would buy Anadarko. Did that ever happen? No. And Anadarko had much less debt, and a much higher market cap, for many years, than Oxy has now. Also, the XTO acquisition still hangs pretty heavy for XOM. I of course could be wrong, but I just don't see XOM buying Oxy. I have friends at XOM, and they're all questioning shale internally over there. While some say it belongs in a diverse portfolio, others feel like we've shifted too much towards shale as an industry, and that's why we're in the situation we're in now. I could be wrong of course, but even for XOM, Oxy would be a significant purchase, due to the debt. If XOM wants to increase their shale presence, there are plenty of cheaper and smarter plays than Oxy. I would be truly shocked if it ever happened. Like I was shocked when Oxy bought us (as was most of the rest of the smart money).

Oxy must fire Viki Hollub ASAP. Any good press they received from the affirmative action aspect has long since gone away. The Anadarko acquisition was just too poor of a decision, and she needs to go, as she is not qualified to be a CEO.

@ken....

Are you kidding me? Oil has survived because of M&A. These happen all the time and this speculation has more merit than other rumors about BK. Anyway, I found it interesting and you obviously didnt read it. XOM debt is much better managed and isnt an issue. Just as its stated, XOM can use roughly 60 to 70% of their 2020 or 2021 capital projects budget to increase production through acquisition and gain assets vs spending capital or making an FID on new / long term projects.

This is just as likely to happen than some strong and opinionated CEO trying to out bid CVX and over pay for a company.

XOM has poor management and cannot take on anymore debt. This article at Seeking Alpha is just click bait. Over the years I’ve seen many speculative articles like this one about Big Oil buying some company, ie OXY buying Apache, MRO being bought out, etc. None of these ever materialized. Don’t waste your time speculating like this.

Probably the best bet for Oxy is to get bought. It’ll mean more layoffs and more Oxy angst, but at least it’ll be the first transparent news at Oxy. The shady EC is just so darn shady. They bet on the wrong recourse and, well, at least they are #1 in the Permian now. Whatever that is worth.