Houston-based Occidental Petroleum Corp. is planning to cut back $500 million on its spending this year. The company said it plans to spend $4.5 billion in 2019.
“By maximizing efficiencies, we are reducing spending to adjust to a lower oil price environment,” stated Oxy CEO Vicki Hollub on the company’s Feb. 13 earnings call.
Oil had fallen in the fourth quarter to around $50 per barrel.
Hollub said, “The fourth quarter of 2018 wrapped up a successful year for Oxy, both financially and operationally. We returned $900 million to shareholders in the quarter through a combination of the dividend and share repurchases. Our continued focus on increasing returns for our shareholders was achieved due to outstanding performance from all three of our businesses in a changing market condition.”
“Despite WTI falling below $43 a barrel in the quarter, we posted core earnings per share of $1.22 and generated the highest semi-annual level of operating cash flow since 2014, making the second half of 2018 our strongest six-month period since our portfolio optimization,” she added.
“Permian cash operating costs were the lowest this decade, driven by the long-term high return investments that we’re making such as in facilities and infrastructure. We operate our assets with a full life cycle view. Our investments will continue to provide payback in the form of lower cost as our production base expands.”
She also said, “In 2018, we returned more than $3.6 billion to shareholders through our sector leading dividend and $1.3 billion of share repurchases under our $2 billion plus share repurchase program. We intend to complete the remainder of the share repurchase program in 2019. We remain committed to returning capital to shareholders through a balanced combination of dividends and share repurchases as we’ve done for a long time.”
The company vice president of investor relations, Jeff Alvarez, said that most of its spending program will go toward the company’s Permian Resources business line, which will take $2.6 billion in 2019.
The company’s CFO Cedric Burgher said it is keeping an eye out for acquisition opportunities where it operates.
“There’s certainly a lot of assets and small private companies that don’t seem to have the scale or the technology to put themselves in a low-cost producer status,” Burgher remarked. “So at some point perhaps those come to market at more reasonable prices.”
Looking ahead, the company has forecast $18.93 billion for full-year revenue in 2018.