Occidental Petroleum Corp. expects oil and gas output to dip in the second half of the year and will not boost production until it "significantly" reduces debt, CEO Vicki Hollub said Aug. 11.

The company has been struggling with debt taken on during its $38 billion acquisition of Anadarko Petroleum last year, an ill-timed bet on oil prices rising.

The Anadarko purchase was intended to increase efficiency and profits by boosting oil and gas production. But Occidental's output will dip in the third and fourth quarters and it will end the year pumping about 1.2 million bbl/d of oil and gas, roughly 200,000 bbl/d less than the year prior.

The production outlook "does not inspire confidence in capital efficiency" or in the ability to "meet sustaining capital requirements next year," Mizuho Securities USA analyst Vincent Lovaglio said, adding that Occidental needs to finalize a major asset sale.

Occidental did not release 2021 spending plans, but said it would have to spend about $2.9 billion to keep production flat, based on oil prices at $40 per barrel.

It has about $4.5 billion in notes due next year and reported long-term debt of $36 billion on June 30. Warren Buffett's Berkshire Hathaway Inc. holds about $9.7 billion in Occidental preferred shares that pay a dividend of about 8%.

Occidental is restarting some activity in the Permian Basin and Gulf of Mexico, but its focus is to "ensure that we have the liquidity to go forward so we have the ability to meet our maturities," Hollub said on a call with analysts.

It no longer plans to sell Algerian assets it had once hoped to sell to France's Total SA to pay down debt, Hollub said, calling Algeria a "core asset." Algerian authorities had moved to block Total’s acquisition.

Occidental is still marketing assets in Ghana and expects to sell a land and minerals package in Wyoming this year.

On Aug. 10, the company posted an $8.35 billion second-quarter loss amid lower energy prices and write-downs.

Occidental shares dipped 3.9% to $15.95 in afternoon trading.