K--ler B’s = Buffet, Buy and Break-apart.
OXY will be burdened with a 8% high interest predatory loan, Total is going deeper in debt with stupid Africa purchase and Shell will get GOM/deep water. After OXY falters, Chevron will pounce again. You heard it here first folks.
OXY needs to stay diversified. Keep a wider moat.
Oxy states that the chemical business serves as a hedge for oil downturn periods. That's a good approach that served well the majors in the past and before 2010-2012 timeframe when the word was to spin-off refineries and terminals to unlock value (e.g. Marathon unlocked, result is refinery branch bought everyone in market while oil is smaller than APC).
The GOM is viewed by Oxy as cash flow, will not invest to grow, steady as-is with APC team doing the work.
No more acquisitions until the debt level is manageable, not sooner than 2021 is the optimistic scenario. Small bolt-on maybe but nothing in $BB.
Read the transcript from investor call. There is a statement about multiple "inbound" requests to sell assets that Oxy is entertaining. Powder basin is interesting play with no cost exposure at this point. No reference made for rest of assets except something about DJBasin and potential gains.
I will be surprised if they don't follow the above since investor calls are not forgiving and every 4 months.
The Wirth guy was hostage of the capital discipline image that he created with Wall Street. Even if he wanted to bid the price up would have risked his supposedly reputation and don't mess with the street.
Oh for f---'s sake. The redactions.
Interesting thought on Chevron ultimately coming back to gobble up the combined OXY+APC. I think that’s one very plausible scenario.
Another is that, among other assets, OXY also divests its Chemicals business. According to their investor preso, Chemicals is supposed to generate nearly $1 billion in EBIT this year. So might be worth $8-12 billion if sold. Then, backed by a bit more cash from Warren, OXY could go on a real acquisition binge in the Permian.
Say it got $10B from Chemicals and another $10B from Warren, they’d have a $20B (unlevered) war chest. Diamondback Energy, for example, has a market cap <$20 billion.
Berkshire Hathaway has about $100 billion ‘lying around’ in net cash. Just sayin...
Wake me up when this is over.