I know these uncertain times, consisting of Covid, the oil crash and this clusterf–k of an acquisition, is causing a lot of FUD. With that said, does Occidental really lack the free cash on hand for the short term (6-12 months)? Maybe i’m confused. Where is this bankruptcy talk coming from? I mean near-long term this company is f—ed if oil prices do not correct upward, but to be fair, few, if any outside of the majors are surviving if the near/long term oil price stays at or below $20.... not just Occidental.
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@rnd+14g88mAf Yes and no. A large amount of the ability to pay down the debt was predicated on asset sales which are not going to happen at nearly the projected rate. Debt repayment was planned to be 7 billion from FCF + Asset sales. With FCF negative and reduced to no asset sales, the 5 billion will vanish within the next year.
No debt maturities this year but 30% pay cut smacks of desperation.
Not sure what to make of it, but I heard if we all wear Hawaiian shirts, hold hands and sing Kumbaya we may not have to worry about this anymore.
Icahn isn't going to sit around and wait. As soon as he can, assets will be sold or the company split/primed for acquisition.
There is a $5b indrawn committed revolving credit line, then the company will borrow against its reserves (reserve-based secured lending). The existing debt is unsecured! Cutting capital, the dividend and sg&a will lower the cash burn rate considerably even with revenues at $20 oil - there are at least a couple years of capacity at these prices before bk!! (There is additional creativity - although toast now, see some of the things CRC had done over last 5 years)
Honestly, if you look at our debt and inability to generate enough revenue in the future, there just is not enough money to keep us afloat. 6-12 months is all we have. I’m sorry.