HOUSTON: Occidental Petroleum Corp on Wednesday unveiled a new round of deep spending cuts, slashing budget for a second time this month and sharply reducing salaries, as the debt-laden U.S. oil producer tries to save cash amid tumbling energy prices.
Global oil prices have dropped 60per cent since January as fuel supply piles up because of the coronavirus pandemic that threatens to cause a global recession and as Saudi Arabia and Russia plan to pump more oil to grab market share.
Globally-traded brent crude was down 2.5per cent at US$26.48 on Wednesday.
Occidental now plans to spend about US$2.8 billion on production in 2020, almost half its original budget of about US$5.3 billion.
Oil and gas production will fall about 6per cent below a prior forecast, and salary and other expense cuts will save the firm another US$600 million this year, the company said.
Some of Occidental's U.S. workers will have their pay cut by 30per cent and others, including those covered by the Anadarko acquisition agreement, will see smaller cuts, according to a memo reviewed by Reuters.
Chief executive officer Vicki Hollub, who championed the company's ill-timed US$38 billion Anadarko acquisition, will take a pay cut of 81per cent. Salaries of other top executives will be reduced by an average of 68per cent, according to the memo.
"We now expect to significantly lower our costs in all aspects of the business," Hollub said in a statement, adding the company "will continue to take actions as necessary to further strengthen our balance sheet and ensure the long-term viability of our business."
The company said it expects the latest round of cuts to lower domestic operating costs to US$7 per barrel of oil equivalent (BOE).
Occidental had already pared spending and cut its shareholder dividend by 86per cent earlier this month. It has also dismissed staff and sold assets to avoid being overwhelmed by the debt taken on to pay for the Anadarko deal.
In a separate statement on Wednesday, Occidental announced a settlement with Carl Icahn, adding three of the activist's associates to its board and ending a bitter fight that began with the Anadarko deal.
(Reporting by Shariq Khan in Bangalore; writing by Gary McWilliams in Houston; Editing by Christian Schmollinger and Shinjini Ganguli)