You are right to be concerned. Oxy is buying APC at around 80x earnings. Here are some ballpark numbers...please check my math.
Oxy debt at close without further asset sales (after Total sale) will be around $28B ($12B financed on closing + $8B current Oxy debt + $10B current Anadarko debt). At 5%, that's $1.4B annually in interest alone. That doesn't count Buffett's $10B.
Then comes BRK preferred dividend at $800MM annually.
Current Oxy shares + converted APC shares (at .2934 Oxy shares per APC share) will be 895MM total shares outstanding. At $3.12 forward dividend, that's $2.8B per year to keep the dividend on common stock.
So just to pay the interest on the debt plus the dividend would be $5B per year.
Oxy current taxes $1.5B per year and APC's are $733MM, so let's say an additional $2B in taxes post merger. Just a wild guess.
So $7B in interest, dividends and taxes annually for NewOxy. This doesn't count principle payments to deleverage, or additional asset sales.
Oxy's current income before interest and taxes is $4.7B and APC's is $2.3B.
Oxy is gonna have to thread the needle on oil price and cost savings to make this work
Originally posted by @Z234jPF-arp . I have to agree 100% with this