Summary
Occidental Petroleum Corporation (OXY) has announced the commencement of cash tender offers for several series of its senior notes due between 2021 and 2022, with an aggregate purchase price cap of $1.5 billion. This initiative aims to proactively manage its debt profile. The tender offers also include consent solicitations to amend certain covenants and events of default in the governing indentures, which could provide Occidental with greater financial flexibility. Funding for these offers will come from a concurrent registered offering of senior unsecured notes, indicating a strategic move to refinance and potentially extend debt maturities. These actions are occurring against a backdrop of significant challenges in the energy sector. The company also disclosed significant expected impairments to its oil and gas properties, estimated between $6 billion and $9 billion after-tax for the second quarter of 2020. This impairment is largely attributed to the prolonged impact of the COVID-19 pandemic on global oil demand and prices, which have significantly depressed commodity markets. Occidental anticipates its second-quarter production will be at the higher end of its previously issued guidance, but the overall financial impact of the depressed commodity price environment remains a key concern for investors.
Key Highlights
- 1Occidental Petroleum launched cash tender offers to repurchase up to $1.5 billion of its outstanding senior notes maturing between 2021 and 2022.
- 2The tender offers include consent solicitations to amend debt covenants, potentially increasing financial flexibility.
- 3The debt repurchases will be funded by a concurrent registered offering of senior unsecured notes.
- 4Occidental expects a significant after-tax impairment charge of $6 billion to $9 billion in Q2 2020 for its oil and gas properties.
- 5The impairment is primarily driven by the sustained low commodity prices resulting from the COVID-19 pandemic's impact on global demand.
- 6Preliminary Q2 2020 production is expected to be at the high end of guidance (1,340-1,400 Mboe/d).
- 7The company is facing a putative securities class action lawsuit related to its 2019 Anadarko acquisition and subsequent financings.