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Occidental Petroleum: An 'Accidental' High Dividend

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Dividend Diplomats


  • OXY is down over 80% from their 52-week high of $68.83, now trading at $12.51.
  • OPEC deal fell through, causing a 24% decline in oil, with the price per barrel of oil below $35.00, the lowest price in almost 20 years.
  • OXY had recently acquired Anadarko for over $55 billion, adding a barrage of debt to their balance sheet, in hopes to be a giant oil player.

Occidental Petroleum - 2020 Background

It's safe to say, on this day of March 9th, that many investors and prospective investors are looking at Occidental Petroleum (NYSE:OXY) as having one too many "accidental" problems to work through. What once was a steadily growing and high cash-flowing oil and gas company, is now a highly contaminated company that investors are fleeing from (no pun intended, as it relates to the Coronavirus/COVID-19).

However, with the stock plunging from $68 per share down to $12.51 per share, could this actually be an investment that you can buy and hold, while they continue to clean up their balance sheet and persevere through the downturn in oil prices? As an alternative, this could very well be a stock that investors should stay away from. Therefore, I want to review the story from the acquisition of Anadarko, the impact of the Coronavirus/COVID-19 and the oil-price war, to make a conclusion on what a current and prospective dividend investor could do with owning their stock.

Occidental Petroleum Buys Anadarko

The accidental problems began with the, first proposed, acquisition of Anadarko. The bidding war for Anadarko, believe it or not, began at $33 billion from one, big-oil, giant Chevron (CVX). However, that was only just the beginning. Occidental came swooping in with a whopping $38 billion offer, up $5 billion from Chevron's. It didn't end there. Occidental proceeded to increase the cash portion of their offer, Warren Buffett chipped in a $10 billion investment and Occidental planned to sell almost $9 billion of assets to help finance the deal. In total, the cost swelled to approximately $57 billion for Occidental to, what we may or may not end up saying, "accidental"-ly acquire Anadarko.

OPEC Fails To Strike A Deal

Now, Anadarko, in and of itself, was not an entirely poor acquisition. Anadarko

This article was written by

Dividend Diplomats profile picture
Two guys who love Investing, Dividends, Frugality, Passive Income & attempting to Reinvest Our Dividends to one day achieve Financial Freedom! Follow us on your journey towards a work-free life! We share EVERY ASPECT of our journey on our blog, social media, and YouTube Channel. Make sure to follow us so you don't miss an update. Updates include the stocks we are watching, buying, selling, and our overall thoughts about the the marketBlog: http://www.dividenddiplomats.comYouTube Channel: www.youtube.com/dividenddiplomatsTwitter: https://twitter.com/DvdndDiplomats

Analyst’s Disclosure: I am/we are long OXY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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