CEO Vicki Hollub’s aggressive strategy raises concerns

  • Occidental Petroleum is issuing debt to finance its $12 billion deal for Crownrock
  • The company already has a highly leveraged balance sheet
  • The deal could make Occidental vulnerable to a drop in oil prices
  • Occidental’s stock has fallen since rumors of the deal surfaced
  • Occidental plans to shed assets and reduce debt after the deal
  • The company is betting on strength in energy markets

Occidental Petroleum is taking a risky move by issuing debt to finance its $12 billion deal for Crownrock. This decision comes despite the company already having a highly leveraged balance sheet, which could make it vulnerable to a drop in oil prices. Since rumors of the deal surfaced, Occidental’s stock has fallen, and Wall Street has shown skepticism towards the transaction. However, Occidental plans to shed assets and reduce debt after the deal, aiming to maintain its investment-grade credit ratings. The company is betting on strength in energy markets, but investors will have to hope this deal works out better than Occidental’s previous acquisition of Anadarko.

Public Companies: Occidental Petroleum (OXY), Exxon Mobil (XOM), Chevron (CVX), Anadarko Petroleum (APC), Pioneer Natural Resources (PXD), Hess (HES), Berkshire Hathaway (BRK.A)
Private Companies: Crownrock
Key People: Vicki Hollub (CEO of Occidental Petroleum), Cole Smead (Co-manager of the Smead Value fund), David Deckelbaum (TD Cowen analyst), Carl Icahn (Investor), Warren Buffett (Chairman and CEO of Berkshire Hathaway)

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Factuality Level: 7
Justification: The article provides information about Occidental Petroleum’s debt-financed deal for Crownrock and its potential impact on the company’s leverage and stock price. It includes quotes from industry experts and analysts, as well as information about oil prices and Occidental’s plans to reduce debt. However, the article does not provide a comprehensive analysis of the deal or include any opposing viewpoints.

Noise Level: 3
Justification: The article provides relevant information about Occidental Petroleum’s debt-financed deal for Crownrock and its potential impact on the company’s leverage and stock performance. It includes quotes from industry experts and analysts, as well as details about oil and gas prices. However, the article lacks scientific rigor, intellectual honesty, and actionable insights. It mainly focuses on the financial aspects of the deal and does not explore the consequences for those who bear the risks.

Financial Relevance: Yes
Financial Markets Impacted: Occidental Petroleum

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses Occidental Petroleum’s debt-financed deal for Crownrock, which could make the company vulnerable to a sharp drop in oil prices. However, if prices rise, shareholders stand to gain significantly. There is no mention of an extreme event.

Reported publicly: www.marketwatch.com