Occidental posts losses of more than $5 billion

More on the oil crash


HOUSTON — A billion-dollar write down and a loss in its core oil and gas business drove Occidental Petroleum Corp. to report its largest loss in at least a quarter century Thursday.

Houston-based Occidental said it it lost $5.18 billion or $6.78 per share in the fourth quarter.

The loss included an after-tax charge of $5.4 billion charge incurred mostly due to cheap oil eroding the value of its assets. The company’s core oil and gas production business reported a loss  of $129 million in the final quarter of 2015.

On a call with investors Thursday, executives remained optimistic. They noted the company began 2016 with $4.4 billion in cash on hand, giving the company leeway to pay out $2.3 billion in dividends and simultaneously fund a $3 billion capital budget. Occidental also expects to receive a $1 billion payment from the Republic of Ecuador following a decade-long arbitration battle.

“We’re fortunate to have the cash on the balance sheet now. That’s really what’s helping to protect the dividend,” said Vicki Hollub, who has been tapped to lead Occidental after current CEO Stephen Chazen retires.

Occidental said it planned to trim its capital spending budget to between $2.8 billion and $3 billion in 2016, down by 50 percent from 2015’s $5.6 billion fund. Most of the funding will be spent drilling in the Permian Basin and completing long-term projects in the chemicals and midstream business.

Despite the cut, Occidental expects its total production from core assets — excluding areas such as Bahrain, Libya, Iraq and some of the U.S. basins it sold in 2015 — to grow by between 2 percent and 4 percent when compared to 2015.

The company expects to pump between 570,000 and 585,000 barrels of oil equivalent per day from its core holdings in 2016. In the U.S., the company expects to produce between 270,000 and 285,000 barrels of oil equivalent per day.

Occidental realized about $38.68 per barrel oil it produced in the fourth quarter of 2015, down 19 percent from the third quarter of 2015 and 46 percent from the fourth quarter of 2014.

The price of oil has been offset somewhat by a one-third decline in drilling in completion costs across 2015. The company’s operating costs fell by $2 per barrel to less than $11.57 in the fourth quarter. Occidental also said it cut its administrative costs by $225 million or 16 percent across 2015.