I only own half my position in OXY so I am hoping it follows many of the other companies that reported this quarter. they beat earnings and the stocks still sold off. If it should by some reason get back to $95, I would like to finish buying.
Hope you waited a little while, after opening up it has been hammered all day. Got a bunch of Sept. 98s hoping that OXY will have good earnings as most of the oil guys have.
I haven't done all the research work on oxy itself yet, but I do plan to hold both. I think CRC could be the next EOG. I like the OXY assets and agree they could spin off more of the assets. you could get CRC this year and another spinoff in the future for the MLP able assets.
Did you incorporate the info from slides 26 & 41 from the 5/30/14 Sanford Bernstein presentation.
On slide 26 they talk about debt to the new company and money back to OXY to reduce OXY share count.
Company will have ~$5 bn of debt with
proceeds distributed to Oxy to be used
primarily to repurchase shares.
On slide 41 they show in 2013 OXY had 805 million shares and earnings of $6.95/share. They are projecting that after the spin they will have 689 million shares (due to buy backs from the restructuring) and $8.05/share in earnings. based on today's dividend of $2.88, that is about 35% of earnings. As a % of cash flow the dividend would be much lower.
Finally after everything is completed they could take all of their Midstream and pipelines and drop them into an MLP.
Although the California company may have interest for some shareholders, I intend to sell and put the proceeds into OXY. I already own a lot of shares in HK & KOG shale drillers that do not pay dividends.
After reviewing all 219 pages of the form 10 for the spin off, I bought OXY. Oxy will keep the Permian, International, chemical and pipeline assets. CRC will keep the California assets. Based on the Form 10, CRC accounts for 17% of OXY's revenues. This currently values CRC at 13.3 B in market cap. Here is my valuation case for CRC. These assumptions are based on if OXY would issue 1 for 1 stock spin off to compare.
4.2 B in revenues
869 M in net income
1.10 in EPS (Based on 2013 EPS)
10 - 15% growth rate
Current CRC valued stock price $17
Based on 2016 projected earnings and assuming a modest 15 P/E, CRC could easily trade at $22. That is a premium of 30% of what its being valued at as part of OXY. As for OXY itself, It would be worth $83/ share and sport a 3.46% dividend yield. That would give it a payout ratio on 50% which isn't very bad. They could easily keep that dividend.
Good note. Thanks for posting. Oxy will be well positioned in 2015 - 2017.
Sentiment: Strong Buy
This could be good news for OXY shareholders for the long term:
Even as production soars, “strong growth rates in the supply of oil are already slowing,” the bank says, noting that growth in output from U.S. crude oil fields slipped to 12% at the end of June, down from 15% a year ago.
The bank upgraded its 2015 forecast for U.S. oil prices to $108 a barrel, from $85 a barrel previously. Lower oil exports from Iraq, turmoil in the Ukraine, and China's building up of it's strategic oil reserves are likely to contribute to higher prices as well.
Occidental Petroleum Corporation (OXY) today announced the leadership team for its subsidiary California Resources Corporation (CRC), appointing Todd A. Stevens as President and Chief Executive Officer, and William E. Albrecht as Executive Chairman of the Board. CRC will be an independent oil and natural gas exploration and production company focused on high-growth, high-return conventional and unconventional assets exclusively in California.
“Todd and Bill are eminently qualified to lead CRC,” said Stephen I. Chazen, President and Chief Executive Officer. “They bring proven leadership abilities and more than 50 years of combined industry experience. Both have played an important part in building and managing our California operations for over 15 years.”
Mr. Stevens, 47, a 19-year veteran of Occidental, has served as Vice President, Corporate Development, since August 2012. In this role, he has led the company’s growth-focused initiatives including mergers and acquisitions, land management and worldwide exploration, and has played a key role in the capital allocation process. From 2008 to 2012, Mr. Stevens was Vice President, Acquisition and Corporate Finance, and Vice President, California Operations, for Occidental.
Mr. Albrecht, 62, has been President, Occidental Oil and Gas - Americas, and Vice President, Occidental Petroleum Corporation, since 2011. With more than 35 years of industry experience, Mr. Albrecht was responsible for Occidental’s oil and gas operations in North and South America, including its Health, Environment and Safety, government relations and social responsibility activities. He joined the company in 2007 as Vice President, California Operations.
Occidental will continue planning for the separation of the businesses, including determining the board of directors for CRC, and will continue to disclose material developments as they occur.
The CAGR of the dividend payout
The rate of inflation of transport fuels
If I understand, the price relation you describe is because of 'inflation'.
As to whether the incremental increase of one price can be offset by the other - that would depend on 1) the amount of gasoline purchased and 2) the number of shares owned.
Based on where the price is today , it should be higher after the restructuring is done. The number of shares outstanding will go from 805 million to about 690 million and the earnings are expected to increase and free cash flow increase by $1.1 billion. All this is spelled out in the May 30th Sanford C. Bernstein conference presentation. In addition you will own shares in the California company.
There will not be a split with the spinoff coming up. Oxy's pps will decline dramatically with the spinoff, with the loss of the California assets.
I love the idea....I love the fact I'll have shares in both. I love the fact that OXY will now pay no CA tax on approx. $10B while the new will get an approx. $1.2B tax bill.