The smart choice by Chevron. The price being paid by Oxy is quite high.

Cyp0111 said:

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The smart choice by Exxon. The price being paid by Oxy is quite high.

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I think you mean chevron. I agree. Oxy's shareholder meeting will be interesting tomorrow. Wonder if anyone is seeing the lengths they are going to and having buyers remorse.

I think the wailing and gnashing of teeth will die down if Oxy completes the $15B asset sale essentially before the deal closes. They are already halfway there and sounds like they have a promising lead with Shell.

Winner's curse comes to mind.

Imo this deal makes sense for Oxy on most price decks, but they have more risk now. They are more sensitive to commodity risk and potentially overextended.

Ulrich said:

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Imo this deal makes sense for Oxy on most price decks, but they have more risk now. They are more sensitive to commodity risk and potentially overextended.

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That's why they got the Buffett CYA money.

I think the Pref Equity reduces the risk towards the leverage ratio, however, the balance sheet is still potentially overextended. I'm not an Oxy Shareholder but see this transaction as not a good one for shareholders.

That's some expensive money, which is part of my point. They are taking on debt and other financial commitments that could come back and bite them if they don't maintain sufficient positive cash flow.

8% paper w warrants. Yes- it's expensive and given Capex requirement to develop the large Permian position could stress cash flows and given current emphasis on returns to equity holders hurt stock valuation.

I have heard rumors of OXY shareholders up in arms because OXY used financial loopholes ( Buffett financing) to keep the deal from being up for shareholder approval. Could current OXY BOD perhaps be at risk of losing their sweet gigs?

Not just a rumor for at least one large institutional holder:

https://seekingalpha.com/news/3459561-occidental-investor-plans-vote-board-due-anadarko-bid

Winners Curse is typically when you have a ton of bidders

Oxy stock is at a 10 year low and dropping more today. The outcome of their shareholder meeting will be very interesting today.

coolerguy12 said:

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Oxy stock is at a 10 year low and dropping more today. The outcome of their shareholder meeting will be very interesting today.

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I'm giving strong consideration to jumping in with both feet on OXY stock

I would have to ask, why ?

Cyp0111 said:

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I would have to ask, why ?

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Mainly the steps already taken to unload the assets they don't want. I just don't see any reason for them to stay in this mid-50s for long.

Also, Buffett and Co. ain't no fools.

You do realize buffet has an 8% pref note with warrants. It's a yield play for him. If you want to get long oil and gas there are better options. I still think the current dividend is going to be difficult to maintain.

Cyp0111 said:

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You do realize buffet has an 8% pref note with warrants. It's a yield play for him. If you want to get long oil and gas there are better options. I still think the current dividend is going to be difficult to maintain.

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I am well aware of Buffett's deal. I think as long as they're able to unload everything they don't want in short order, it will work out really really well for them.

Unloading complex assets could get sticky. If they would be selling to someone that is already Anadarko's partner then that could be considerably easier. I don't know the assets or partners

You're right, Buffet ain't no fool. Standing at the head of the line in front of Oxy common shareholders is a great place to be. He's the biggest winner in this whole deal.

Cyp0111 said:

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You do realize buffet has an 8% pref note with warrants. It's a yield play for him. If you want to get long oil and gas there are better options. I still think the current dividend is going to be difficult to maintain.

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Out of curiosity which options would you recommend

I would have to look. Investor sentiment is so negative for E&P companies.

My issues with Oxy is as follows

1) Paid a premium for a company with world class assets for the Permian Position and will know directly be competing against the supers in a capital allocation/scale game.

2) GOM, Colorado and Mozambique assets are going to be tricky to integrate and/or offload. Fully aware of Total deal but deal terms will be interesting. The Andarko GOM position is well outside the technical scale of Oxy and even if they plan to keep production flat it's an interesting asset to fold in and has only a few buyers.

3) the Colorado position although strong from an asset package perspective has to deal with Colorado political risk which greatly devalues the acreage position.

One could say this is factored into the stock price and likely is to an extent, however, Oxy is paying a fortune for essentially acreage and they have to protect their dividend. If oil prices fall they're going to be heavily over extended and short cash flow generation.

Completely agree. Oxy just went from being a financially stable and disciplined independent to one that will likely not survive the next downturn intact.

HeightsAg said:

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Slow clap for Vicki

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Lol. " We were not going to let it be taken away. "

Fuggin dumpster fire right now.

Face first into the wood chipper.

I used to call them boom time managers. When they make bad decisions during the good times it can usually be hidden until the bad times occur even when it is an obvious bad decision. They surely can't guide a company thought the bad times with their mentality. A good leader will get a company through the bad times and thrive during the good times.

The OXY board needs to be jettisoned as well.

Would now be a good time to get in on OXY?

It's either really good or really bad. Flip a coin, but I think they're headed for bankruptcy or a buyout at pennies on the dollar.

They wheeled and dealed and bet the farm that prices would stay high. If prices go right back up to higher than they were before they could be fine.

Ulrich said:

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It's either really good or really bad. Flip a coin, but I think they're headed for bankruptcy or a buyout at pennies on the dollar.

They wheeled and dealed and bet the farm that prices would stay high. If prices go right back up to higher than they were before they could be fine.

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Thanks.

Aggie Pharmer said:

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Would now be a good time to get in on OXY?

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Just sliced dividend from 0.79 to 0.11.. yield approx 3%

Ridge14 said:

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Aggie Pharmer said:

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Would now be a good time to get in on OXY?

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Just sliced dividend from 0.79 to 0.11.. yield approx 3%

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still $0.11 too high