The Howard Hughes Corporation announced yesterday that Occidental sells millions of dollars worth of commercial assets to their organization. I have to admit, I am floored. This is so because I also know that Carl Icahn is pressing a proxy fight to remove all of the members of the board of directors at Occidental. Icahn claims that the price for the Anadarko purchase, and the cost of the related financing, were too high. He further states that the purchase has ruined Occidental. The sale was valued at $55 billion. Occidental’s stock price today is about $40, down about 50% from 1 year ago.
The sell to the Howard Hughes Corporation is troubling because it sounds like a “garage sale”. In my opinion, Occidental is scrambling to raise capital. Can any one spell “fire sale”? Lets take a look at the financial statements for Occidental released in Sept. 2019. Remember that the Anadarko transaction occurred in the 2nd Qtr. of 2019.
* all values are in the millions of dollars
|Item||2018 (YTD)||2019 (3rd Qtr.)|
|Net Income To Common Stock||4,131||(912)|
|Dividends per Common Share||3.1||0.79|
Looks like Occidental is losing revenue and accumulating large amounts of debt. The YTD totals for 2019 in Sept., as regards total liabilities was $131005; and for equity it was $83588. That means the debt to equity ratio is about 1.5, which for the oil business is too high. It should be below 1.0. Yahoo says the P/E is about 30, which is also too high. A good value is 15 and below. Conclusion is that Occidental is over priced and has too much debt. Go get’em Carl Icahn.
Here is the link to the financial statements. https://www.oxy.com/investors/Reports/Pages/default.aspx