Actionable news
0
All posts from Actionable news
Actionable news in OXY: OCCIDENTAL PETROLEUM CORPORATION,

While Its Dividend Is Questionable, Occidental Petroleum Is A Solid Company

While it's hard to justify supporting such a strong yield in the current environment, Occidental Petroleum Corporation is still a solid company.

After its recent debt raise, the company has no near term debt maturities and plenty of liquidity.

On top of its impressive Permian position, the company is also about to realize material gains from its downstream expansion in Ingleside, Texas.

During the first quarter of 2016, Occidental Petroleum Corporation (NYSE:OXY) received $550 million from its settlement with Ecuador, with another $300 million on its way. This is good news, especially due to the inherent political risks that are exacerbated by low crude prices, and provides Occidental Petroleum with the cash it needs to continue paying out its lofty dividend. The company also received $285 million from non-core asset sales, which included selling off the Dallas tower, its Piceance Basin operations, and a small specialty chemical operation.

Occidental Petroleum exited the first quarter of this year with $3.2 billion in cash and in April 2016, the company issued out $2.75 billion in senior notes at very reasonable interest rates to cover $2 billion in maturities through 2017 (not including $700 million that was retired with cash on hand in Q1 2016).

At the end of Q1 2016, Occidental had $8.24 billion in current assets, $6.83 billion in current liabilities (includes $2 billion in near-term debt), and $5.61 billion in long-term debt. When factoring in its debt issuance and maturity payoffs, Occidental will have an extra $750 million in cash on hand on top of its expected $300 million payment from Ecuador, plus an additional $750 million in long-term debt. What makes that even better is that the dollar-weighted average maturity was pushed back by five years, putting Occidental in a stellar financial position relative to its peers.

Source: Occidental Petroleum Corporation Presentation

Liquidity isn't going to be an issue going forward, but investors should be wary of the company's outspend.

The company generated $820 million in operating cash flow last quarter before factoring in negative working capital effects...


More