Occidental to pay dividend to Buffett's Berkshire in cash, not stock

By Jonathan Stempel NEW YORK (Reuters) - Occidental Petroleum Corp said on Monday it will pay a $200 million quarterly dividend to Warren Buffett's Berkshire Hathaway Inc in cash instead of common stock, even as the company tries to reduce debt following a plunge in oil prices. In a regulatory filing, Occidental said the payment on its perpetual preferred stock would be made on Oct.

Reuters September 22, 2020 00:06:01 IST
Occidental to pay dividend to Buffett's Berkshire in cash, not stock

Occidental to pay dividend to Buffetts Berkshire in cash not stock

By Jonathan Stempel

NEW YORK (Reuters) - Occidental Petroleum Corp said on Monday it will pay a $200 million quarterly dividend to Warren Buffett's Berkshire Hathaway Inc in cash instead of common stock, even as the company tries to reduce debt following a plunge in oil prices.

In a regulatory filing, Occidental said the payment on its perpetual preferred stock would be made on Oct. 15.

Berkshire bought $10 billion of Occidental preferred stock in August 2019, helping fund the Houston-based company's $35.7 billion acquisition of Anadarko Petroleum Corp.

The preferred stock carries an 8% annual dividend. Occidental exercised its option to pay Berkshire's two prior quarterly dividends in common stock. Berkshire disclosed last month it sold the stock comprising the first of these payouts.

Occidental "has the ability to generate substantial free cash at current oil prices" to service near-term debts, Morningstar analyst David Meats said in an email. "As a result there's no need to pay the preferred in stock, and the decision to do so earlier was probably due to abundance of caution at the outset of the pandemic and associated oil downturn."

Since March, Occidental has lowered capital spending, slashed its common stock dividend 98.7%, and pursued asset sales to conserve cash and reduce debt from the Anadarko purchase.

The company agreed last month to sell some assets in Colorado, Utah and Wyoming to Orion Mine Finance for about $1.33 billion.

Occidental ended June with $36 billion of long-term debt, down from $38.5 billion at year end.

As of Friday, Occidental's market value was about $11 billion, down from roughly $44 billion when it bought Anadarko.

In afternoon trading, Occidental shares were down 43 cents at $11.22.

(Reporting by Jonathan Stempel in New York; Editing by Lisa Shumaker)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.