PXD - Is Occidental Sinking Far Below Deepwater?
The market became gravely concerned when Vicki Hollub, CEO of Occidental Petroleum (NYSE: OXY), came in, guns blazing with an offer to pay $76 per share for Anadarko Petroleum (NYSE: APC) and backed by $10 billion from Warren Buffett. Hollub seemed tenaciously set on acquiring Anadarko at all costs.
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There are many question marks surrounding Occidental. Unlike Chevron (NYSE: CVX), which is many multiples larger than Anadarko, Occidental is roughly Anadarko's size. On top of that, Occidental already has $11 billion in debt, and that's before Warren Buffett's $10 billion, 8% interest loan. Occidental basically bought something its own size when it didn't have the cash to do so. Their stock price is suffering from it. It has fallen around 40% since Occidental first offered to buy Anadarko and now sits at a 12-year low. Occidental would argue that the price was worth it to create the largest, most dominate, Permian Exploration and Production (E&P) behemoth the world has ever seen. Occidental has no shortage of vigor, but it remains to be seen if the financials can hold up.