Liam Denning, Columnist

Oxy's Slashed Dividend Is Now Just Half of Warren Buffett's Payout

Shareholders keep paying dearly for that Anadarko deal.

March 10, 2020 at 5:59 PM UTC

Liam Denning is a Bloomberg Opinion columnist covering energy. A former banker, he edited the Wall Street Journal’s Heard on the Street column and wrote the Financial Times’s Lex column.

Doing just fine, thanks.
Photographer: Scott Olson/Getty Images North America

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A couple of weeks ago (remember that, oil investors?), Vicki Hollub, CEO of Occidental Petroleum Corp., called its dividend “one of the defining characteristics of our company.” Indeed it is.

Oxy’s decision to cut that dividend, something it avoided doing in two previous oil crashes, is on one hand simply all the company could do at this point. As I wrote here, the dividend yield already traded like a distressed credit, and Oxy wasn’t covering its payments from operating cash flow even before oil prices plummeted this week. Oxy’s bonds tanked on Monday. The new dividend, along with the cut to the capital expenditure budget, conserves $4.1 billion of cash, annualized, equivalent to 12% of Oxy’s net debt.