© Reuters.
Occidental Petroleum (NYSE: NYSE:) has been on a strategic path to strengthen its monetary footing since its high-stakes acquisition of Anadarko Petroleum (NYSE:) again in 2019. The $55 billion deal, supported by a $10 billion most popular inventory funding from Warren Buffett’s Berkshire Hathaway (NYSE:) (NYSE: BRK.A)(NYSE: BRK.B), was a daring transfer that expanded Occidental’s presence within the Permian Basin. The corporate provided a beautiful $76 per share, with 50% of the fairness worth in money, outshining Chevron (NYSE:)’s $65 per share bid.
Following the acquisition, Occidental confronted monetary pressure as a result of excessive value of Berkshire Hathaway’s funding. Nonetheless, the corporate has been actively lowering this burden by way of the redemption of the popular inventory.
The highway to restoration for Occidental started after going through a extreme money crunch triggered by the 2020 oil worth crash. The corporate took drastic measures together with reducing its dividend by 98.7%, promoting property, and specializing in repaying debt incurred from the Anadarko deal. The scenario led to share dilution as funds to Berkshire have been made in inventory.
In as we speak’s local weather, with oil costs rebounding, Occidental has managed to generate extra free money circulate which is getting used to reinforce shareholder worth. This contains rising dividends and initiating share repurchases, marking a turnaround from the corporate’s earlier monetary challenges.
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