Occidental Reportedly May Dump Middle East Assets

Occidental might trim its stakes in Oman, Qatar and the United Arab Emirates, a report says.
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Occidental Petroleum  (OXY) - Get Report shares soared Monday as the beleaguered oil company reportedly is considering dumping some of its Middle East assets in an effort to shrink its debt burden.

Sources told Bloomberg that Occidental might trim its stakes in oil and natural gas fields in Oman. Occidental’s holdings there - in three different oil fields -- may be worth more than $1 billion, they said.

The company may be open to getting rid of other Middle East assets too, but it’s not actively shopping them, the sources said. Occidental also has holdings in the United Arab Emirates and Qatar.

It’s not clear that anything will be sold in the end, the Bloomberg sources said.

Occidental took on $40 billion of debt with its purchase of Anadarko Petroleum last year. Occidental has suffered just like other oil producers from the approximately one-third drop in oil prices since the beginning of the year.

The company felt compelled to adopt a poison pill in March to forestall a takeover. The move came two days after activist investor Carl Icahn told The Wall Street Journal he owned almost 10% of Occidental’s stock.

It announced in April that it was paying a dividend it owes to Warren Buffett’s Berkshire Hathaway  (BRK.B) - Get Report in shares rather than cash. It already had slashed its dividend to common shareholders by 86% to conserve cash.

Occidental shares recently traded at $23.86, up 14.79%. The stock has jumped 84% since May 29 as oil prices have rebounded, but is still down 12% over the last three months.