(Adds details on dividend plans from conf. call)
By Jennifer Hiller and Arathy S Nair
Feb 28 (Reuters) - Occidental Petroleum Corp OXY.N Chief
Executive Vicki Hollub said on Friday the company is ready to
cut spending this year if oil markets continue to be roiled by
global coronavirus fears.
"As global commodity prices have declined sharply in recent
days, we are prepared to reduce our spending if the current
environment does not improve," Hollub said on a call with
analysts.
"We are monitoring the situation closely and retain the
flexibility to adjust our budget if needed."
Occidental plans to spend between $5.2 billion and $5.4
billion, well below the $6.36 billion it spent last year.
Calling dividends a defining character of the company,
Hollub said she was committed to keeping it intact despite
analysts' calls to save cash by reducing the payout.
"We remain focused on maintaining our dividend," Hollub
said, citing its oil-hedging program and pledge to keep capital
costs low.
Occidental said it has the flexibility to bring down its
cost to continue paying its dividend, but will not take on debt.
Tudor, Pickering, Holt & Co analysts said the management
would need to cut budget by more than $1 billion to live within
cash flow after paying dividends, if oil prices remain in the
mid-to-high $40 a barrel range.
"The more prudent move would be to cut the dividend to give
the company breathing room given the leverage profile," the
brokerage said.
U.S. crude prices have fallen about 27% this year and was
trading at $44.64 a barrel on Friday as the global spread of the
coronavirus along with a slowdown in China compounded demand
fears.
Occidental said it has initiated business continuity plans
and built scenarios to deal with the outbreak and could even
allow production to fall "a little bit" if crude prices stayed
The company has been aggressively cutting costs by laying
off staff and selling assets to pay down its $38.54 billion debt
pile following its $38 billion acquisition of Anadarko
Petroleum.
On an adjusted basis, the company posted a loss of 30 cents
per share, much larger than the 19 cent loss analysts had
expected, partly due to higher interest expense.
It also took more than $1.7 billion in impairment and other
charges in the fourth-quarter results.
Shares of the company fell as much as 6.8% on Friday
morning, amid a broader drop in energy stocks. It was trading
down less than a percent at $31.58 at 12:48 ET.