Occidental Chief Executive Steve Chazen advised investors this week that his firm might think about divesting its overseas assets or splitting into three separate entities so as to fund a stock repurchase and improve its share price. During a conference hosted by UBS in New York on Wednesday, Chazen said that selling assets to shrink the size of the company might be necessary in order for shareholders to obtain greater value from the oil and gas producer. One the scenarios Occidental is considering is the sale of its Middle Eastern unit, which includes onshore and offshore oil and gas projects in Qatar and Oman, said UBS.
All of us OXY shareholders would like to know more about Chazen's plans to increase shareholder value. The pps has been stagnant for quite some time. But it's early, give Chazen a chance to formulate his plans and then we'll see. And of course, while we're waiting, we have the dividend income to rely on.
Besides owning OXY shares, I also own shares of COP. COP recently completed a spinoff of PSX and sold other assets to increase shareholder value. And COP's plan did substantially increase shareholder value.
My assessment of COP is that it was poorly run. They acquired lots of oil and gas production assets of which many were later considered non-core. The real value unlocked was the refining business, which was not given full value under the old COP. The spinoff PSX also has chemicals; however, it is a 50% share of Chevron Conoco Chemical which is a lot different than the small chem holdings of OXY. PSX also has the DCP joint venture with Spectra, plus there own midstream and pipelines. Some of their low margin assets like pipelines that feed and distribute form refineries will be dropped into an MLP which they will control.
OXY is more of a pure E&P company, chemicals are small and the midstream according to OXY allows them to get better prices for oil & gas. They should sell the chemicals, drop the midstream into a MPL, which they would control and get rid of most of the international. They could than increase investment in the US and buy back shares with cash over and above what they need for working capital.
I would like to hear more about how the proceeds of the sale would be used. Purchase of domestic production assets, exploration plays, special divident to shareholders? Since Irani and Laurance are gone, why maintain their "hobby" chemical business? Does the company have core competency in or need of a big trading and pipeline midstream business? There are lots of assets that could be divested but what's the plan for re-investment or return to the shareholders? I've got a lot of this long and would really like to know!