Learn more about Hart Energy Conferences
Get our latest conference schedules, updates and insights straight to your inbox.
U.S. oil producer Occidental Petroleum Corp. will increase dividend payments to shareholders once it gets debt levels to $25 billion, CEO Vicki Hollub said on Nov. 5.
"We are going to get there sooner than we expected," Hollub told analysts on a call to comment on the company's third-quarter results.
Occidental quadrupled its debt in 2019 to $40 billion after buying rival oil producer Anadarko Petroleum and its prized assets in the United States' huge Permian shale oilfield.
It used cash from this year's higher commodity prices to repay $4.3 billion of long-term debt in the third quarter, bringing it down to $31 billion. Occidental aims to pare debt below the $25 billion target, she said.
The company, which earlier this week declared a quarterly dividend of a penny per share on common stock, did not specify by how much its dividends would increase.
Shares fell 1% to $33.44 in afternoon trading after Hollub ruled out resuming buybacks, saying repurchases are "a longer-term possibility for us" but will not come in "the nearest term."
Occidental is the only producer "not giving meaningful cash returns back to investors" as oil prices approach a seven-year high, despite a "pretty material" potential to do so after raising its free cash flow yield, Bank of America analyst Douglas Leggate said on Nov. 5.
The company can increase dividends without significant production growth in the coming years, Hollub said. Oil prices could remain well above $50 to $60 per barrel for up to five years, she said during a Federal Reserve energy conference on Nov. 5.
Occidental production is expected to stay at 1.14 million barrels of oil and gas per day (MMbbl/d) in the fourth quarter, from 1.16 million bpd in the previous three months.
Capital spending is expected to increase in the fourth quarter due to maintenance activities in the company's three business segments, it said.
Its profit more than doubled to $836 million in the third quarter from the previous three months, beating market estimates.
Recommended Reading
Moda Closes Sale of Vopak Moda Houston Terminal Interest
2024-01-16 - Moda, backed by EnCap Flatrock Midstream, sold its joint venture interests in the terminal to Madrid’s Exolum.
Sunoco to Acquire NuStar Energy for $7.3B
2024-01-22 - Sunoco LP is adding scale and diversifying its portfolio with its acquisition of NuStar Energy LP, which is expected to close in second quarter 2024.
Energy Transfer’s Sunoco Buys NuStar Energy for Scale, Permian Oil Footprint
2024-01-22 - Sunoco LP is gaining greater scale and adding new business lines through its $7.3 billion acquisition of NuStar Energy LP. But given Energy Transfer’s 100% ownership of the Sunoco partnership, could the deal face pushback by regulators?
Enbridge Closes First Utility Transaction with Dominion for $6.6B
2024-03-07 - Enbridge’s purchase of The East Ohio Gas Co. from Dominion is part of $14 billion in M&A the companies announced in September.
SCF Acquires Flowchem, Val-Tex and Sealweld
2024-03-04 - Flowchem, Val-Tex and Sealweld were formerly part of Entegris Inc.