Occidental Petroleum Starts Layoffs After Purchase of Anadarko

Occidental Petroleum is laying off employees as the company seeks to cut costs following its $38 billion acquisition of Anadarko Petroleum.

Occidental Petroleum (OXY) - Get Report said it would be laying off an unspecified number of employees as the energy company seeks to cut costs following its $38 billion acquisition of Anadarko Petroleum.

Shares were down 2% to $44.09.

A company spokeswoman said that Occidental Petroleum significantly reduced staff through a voluntary program.

"While these (voluntary) programs have been successful and contributed significantly to our goals, we have determined that additional staff reductions are necessary,” CEO Vicki Hollub said in an internal email to employees, according to the Houston Chronicle. “A reduction in force program, based on business necessity by job, is being initiated with individual communications and exit dates.”

The combined company had about 16,000 workers at the time of the merger. 

Occidental bought Anadarko last year and has been cutting costs and selling assets to cover the acquisition. The company's stock lost value after it outbid Chevron (CVX) - Get Report to buy Anadarko.

Occidental took on about $40 billion in debt to close the deal, including new loans and the assumption of Anadarko’s existing debt.

Occidental on Jan. 6 unveiled a plan to clear $7.8 billion of debt from the books by turning a pipeline unit it inherited from Anadarko into a stand-alone company

The layoffs are happening as analysts have increased their rating of the Houston-based company.

Edward Jones analyst Jennifer Rowland upgraded Occidental to hold from sell, while Mizuho Securities analyst Paul Sankey boosted his rating to buy from neutral, saying he believes "the worst is behind the company" and sees an "increasing line of sight" for sustainable dividend growth in 2022 and beyond.