Yes- I think they stick with Chevron with maybe a small add. I imagine there is a preference to Chevron shares.
Chevron/Anadarko
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Last: 4 yr ago by 2wealfth Man
That letter reads like Vicky is madder than a hornet. She wants to leave a legacy.
If oxy doesn't get this deal they become a prime acquisition target.
"You didn't even call me back!" Ha
Not the first time I've heard this, but also think OXY will pursue another acquisition. Just a matter of which one may come first.Cyp0111 said:
If oxy doesn't get this deal they become a prime acquisition target.
Agreed, Chevron will probably just throw Anadarko some more shares to make Oxy go away. Don't know what kind of synergies Oxy expect but given Chevron's size/scale advantage and, it's probably a safe assumption that Oxy can't get close to Chevron's $2b per year estimates. Add to that Chevron's cash position, historic stability as a vertically integrated operator, and industry leading dividends, my guess is that it will be a tall order for Oxy to win this battle.
Quote:
Agreed, Chevron will probably just throw Anadarko some more shares to make Oxy go away. Don't know what kind of synergies Oxy expect but given Chevron's size/scale advantage and, it's probably a safe assumption that Oxy can't get close to Chevron's $2b per year estimates. Add to that Chevron's cash position, historic stability as a vertically integrated operator, and industry leading dividends, my guess is that it will be a tall order for Oxy to win this battle.
this post sponsored by Chevron
Hot take but tell me why I'm wrong
if nothing else, Oxy sure is stoking the flames of a shareholder lawsuit and making the closing a nightmare.
No you're prob right. Just the wording you used sounded very pro Chevron, like out of a TV ad or their website or something.
As someone that has been a part of a market disruption, albeit with new tech, I have a certain level of admiration for OXY's "F U enjoy the headache" approach if they choose CVX over OXY.Furlock Bones said:
if nothing else, Oxy sure is stoking the flames of a shareholder lawsuit and making the closing a nightmare.
After working with Anadarko on several projects over the years, this whole situation is not surprising.
They would frequently make counter productive decisions and ultimately made relatively simple choices way harder than they needed to be, more so than most larger corporations.
This whole thing will probably end up working out for them though unless they choose to stick with Chevron's initial offer. And I wouldn't put it pass them to do that.
They would frequently make counter productive decisions and ultimately made relatively simple choices way harder than they needed to be, more so than most larger corporations.
This whole thing will probably end up working out for them though unless they choose to stick with Chevron's initial offer. And I wouldn't put it pass them to do that.
Hah, probably just been a management consultant for too long but yeah, I am pro Chevron on this outcome. Even if Oxy is somehow able to outmaneuver/outbid Chevron, it will probably seriously constrain their agility and ability to grow given the premium and amount of cash they'd have to give up, especially if expected synergies are not realized and/or if the next downturn impacts oil prices in a prolonged way.
Feels good to see the future on occasion.Casey TableTennis said:
I don't know any of this... just educated guesses from seeing details of a dozen or so major mergers. Will be interesting to see how it plays out. Especially interesting to see if this turns into a bidding war for Anadarko given the relatively low exit fee, or if it sparks further consolidation... hello PXD.
oh, this is definitely Oxy C-suite worried someone else is going to come along and make them the Anadarko. so, instead lets ham string the company in an attempt to get much bigger and ward off a takeover attempt. good news, bigger company means bigger salary of the C-suite.HeightsAg said:
Hah, probably just been a management consultant for too long but yeah, I am pro Chevron on this outcome. Even if Oxy is somehow able to outmaneuver/outbid Chevron, it will probably seriously constrain their agility and ability to grow given the premium and amount of cash they'd have to give up, especially if expected synergies are not realized and/or if the next downturn impacts oil prices in a prolonged way.
Ticker Yield Beta
BP 5.6% .49
RDS 5.8% .56
TOT 5.2% .56
OXY 4.7% 1.15
XOM 4.1% 1.07
CVX 3.9% .78
APC 2.6% 1.34
COP 1.8% .70
1-Cvx offers good yield vs. independents, but not the majors.
2. APC's ownership in Western is worth about $8 billion, debt is $17 billion, leaving $17-25 billion for an E&P company with 1.7 bboe in reserves. That's valuing those barrels at $24-28/bbl. APC's opex & g&a runs $12-13/bbl. That's not a whole lot of juice for the squeeze unless you really believe the synergy story.
My take is the winner of the bidding war will be bigger, but not better. There will be a significant group of former APC holders that will cash out and redeploy capital to another E&P or midstream stock vs. owning a major if Cvx wins putting downward pressure on that side and the debt load on the oxy side.
Will be really interesting to watch this play out either way.
BP 5.6% .49
RDS 5.8% .56
TOT 5.2% .56
OXY 4.7% 1.15
XOM 4.1% 1.07
CVX 3.9% .78
APC 2.6% 1.34
COP 1.8% .70
1-Cvx offers good yield vs. independents, but not the majors.
2. APC's ownership in Western is worth about $8 billion, debt is $17 billion, leaving $17-25 billion for an E&P company with 1.7 bboe in reserves. That's valuing those barrels at $24-28/bbl. APC's opex & g&a runs $12-13/bbl. That's not a whole lot of juice for the squeeze unless you really believe the synergy story.
My take is the winner of the bidding war will be bigger, but not better. There will be a significant group of former APC holders that will cash out and redeploy capital to another E&P or midstream stock vs. owning a major if Cvx wins putting downward pressure on that side and the debt load on the oxy side.
Will be really interesting to watch this play out either way.
They'll fit right in with Chevron...rgag12 said:
After working with Anadarko on several projects over the years, this whole situation is not surprising.
They would frequently make counter productive decisions and ultimately made relatively simple choices way harder than they needed to be, more so than most larger corporations.
Gig-Em2003 said:
That letter reads like Vicky is madder than a hornet. She wants to leave a legacy.
She already has a legacy. The CRC spinoff was her idea, and definitely a big win for Oxy. That's probably why she became CEO, honestly.
Spinning off CRC does not compare to making Oxy larger than it has ever been.
Gig-Em2003 said:
Spinning off CRC does not compare to making Oxy larger than it has ever been.
They wouldn't be financially in a situation to buy Anadarko if they still had CRC. They got about $6.5B for California right when the downturn started. Without that, there's no telling what Oxy would be.
Offloading all that debt onto CRC was a meisterstuck. At these prices CRC will do fine too. They trade at Brent not WTI. Everyone is happy.
Have you looked At CRCs balance sheet. It's creative and coming from someone that plays in that type of space.
Very creative. It's an oil price play at this point. But Brent at $70+ works just fine.
yup.No Pressure said:
Offloading all that debt onto CRC was a meisterstuck. At these prices CRC will do fine too. They trade at Brent not WTI. Everyone is happy.
I worked for a smaller company (Vintage Petroleum) that got taken over by OXY and the severance package was pretty good. The folks that stayed on in transition got double paid for up to 18 mos and then got severance. I got offered a job by OXY as did anyone that would even talk to them but I couldn't get them to tell me what the job really was and the OXY office location in Houston at the time totally sucked from a commuting standpoint from anywhere I wanted to live. I took another job with an independent instead . After only 2 yrs of working at Vintage all my stock completely vested plus the I got an extra six mos pay at severance.
Getting 2 yrs pay after only being there for months ..... that would be a tremendous kick start.
Getting 2 yrs pay after only being there for months ..... that would be a tremendous kick start.
Saw this from a co-worker.
OXY is now offering $38 cash + stock, which the cash portion amounts to about $19B (501MM shares outstanding for APC).
...
OXY has $15B of long term debt and other liabilities (as of 12/31/2018)
OXY only has $3B of cash on hand (as of 12/31/2018)
They will have to take on $15B of APC debt.
19 + 15 + 15 - 3 = $46B of debt? Their Market Cap is $46B!
Maybe Vicki, knowing Oxy won't win, is just forcing Chevron to pay more for the same pot.
I wouldn't be surprised if Chevron sells off some of the acquired assets and focuses in on Permian and Gulf of Mexico.
OXY is now offering $38 cash + stock, which the cash portion amounts to about $19B (501MM shares outstanding for APC).
...
OXY has $15B of long term debt and other liabilities (as of 12/31/2018)
OXY only has $3B of cash on hand (as of 12/31/2018)
They will have to take on $15B of APC debt.
19 + 15 + 15 - 3 = $46B of debt? Their Market Cap is $46B!
Maybe Vicki, knowing Oxy won't win, is just forcing Chevron to pay more for the same pot.
I wouldn't be surprised if Chevron sells off some of the acquired assets and focuses in on Permian and Gulf of Mexico.
In her letter she explicitly stated on the record she had the financing. I doubt that is an Elon Musk style bout of hyperbole.
So you forgot to add in APCs market cap... can't just add APCs debt.
If OXY gets the deal the market cap will be $83 B (not $46). But your point is still valid, OXY is levering up to do this deal, which is why they plan to sell $15 B of assets to pay down debt. They should be at 2x leverage by end of 2020 (according to their plan).
Easiest assets to sell? Mozambique - I don't think they really want to get into the LNG game... so that's an easy sale to XOM for $3.5-4 B. Then they could monetize APCs stake in WES which is sizable.
If OXY gets the deal the market cap will be $83 B (not $46). But your point is still valid, OXY is levering up to do this deal, which is why they plan to sell $15 B of assets to pay down debt. They should be at 2x leverage by end of 2020 (according to their plan).
Easiest assets to sell? Mozambique - I don't think they really want to get into the LNG game... so that's an easy sale to XOM for $3.5-4 B. Then they could monetize APCs stake in WES which is sizable.
Ugh. 18-month APC employee here. This whole thing is turning into a cluster.
Going on 6 years, myself. It's definitely strange times around the office these days.
It's hard to be too worried, though, once you familiarize yourself with the change of control policies.
Good luck.
It's hard to be too worried, though, once you familiarize yourself with the change of control policies.
Good luck.
Berkshire is putting over $10B into Occidental to aid in the acquisition of Anadarko. 8% annual dividend. I want some of that.
Buffet officially in for $10B
https://www.marketwatch.com/press-release/berkshire-hathaway-commits-to-10-billion-equity-investment-in-occidental-to-finance-acquisition-of-anadarko-2019-04-30cgh1999 said:
Berkshire is putting over $10B into Occidental to aid in the acquisition of Anadarko. 8% annual dividend. I want some of that.
Quote:
HOUSTON, April 30, Apr 30, 2019 (GLOBE NEWSWIRE via COMTEX) -- Occidental Petroleum Corporation ("Occidental" or "the Company") OXY, +1.45% announced today that, in connection with the financing of Occidental's proposal to acquire Anadarko Petroleum Corporation ("Anadarko") APC, +0.51% Berkshire Hathaway, Inc. has committed to invest a total of $10 billion in Occidental. The investment is contingent upon Occidental entering into and completing its proposed acquisition of Anadarko.
Berkshire Hathaway will receive 100,000 shares of Cumulative Perpetual Preferred Stock with a liquidation value of $100,000 per share, together with a warrant to purchase up to 80.0 million shares of Occidental common stock at an exercise price of $62.50 per share. The preferred stock will accrue dividends at 8% per annum (or with respect to dividends that are accrued and unpaid, 9%).
On April 24, Occidental made a proposal to acquire Anadarko for $76.00 per share, comprised of $38.00 in cash and 0.6094 shares of Occidental common stock per Anadarko share. On April 29, Anadarko announced that its Board of Directors had determined that the proposal from Occidental could reasonably be expected to result in a Superior Proposal under its existing merger agreement and that it would engage with Occidental.
"We have long believed that Occidental is uniquely positioned to generate compelling value from Anadarko's highly complementary asset portfolio. We are thrilled to have Berkshire Hathaway's financial support of this exciting opportunity," said Vicki Hollub, President and Chief Executive Officer of Occidental. "We look forward to engaging with Anadarko's Board of Directors to deliver this superior transaction to our respective shareholders."
The preferred stock to be issued to Berkshire Hathaway will be redeemable for cash (in whole or in part) at the option of Occidental commencing on the tenth anniversary of issuance at a redemption price equal to 105% of the liquidation preference plus accumulated and unpaid dividends, if any. The preferred stock will also be mandatorily redeemable for cash (in whole or in part) upon certain specified capital return events. Dividends will be paid in cash or, at Occidental's option, in shares of Occidental common stock. The warrant to be issued with the preferred stock may be exercised in whole or in part and from time to time, until one year after the redemption of the preferred stock.
The preferred stock and the warrant are being issued and sold in a private offering.
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