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Occidental Petroleum agreed to a truce with activist investor Carl Icahn, ending a bitter 10-month campaign by the billionaire activist investor to fire the board and seize control of the company.
Now, Chief Executive Officer Vicki Hollub’s future will be in the hands of a new board after surviving Icahn’s calls for her resignation. But her most immediate challenge will be Occidental’s near $40 billion of debt at a time when oil is trading below $25 a barrel, near the lowest price in 18 years.
During his battle with Occidental, Icahn wanted to oust the company’s entire board, including Hollub, the firm’s stock dropped over 80% and the shale giant had its credit rating downgraded to junk.
As part of a deal announced Wednesday, four directors will retire from the company’s board and be replaced by two Icahn acolytes, as well as Herbalife Nutrition Ltd. board member Margarita Palau-Hernandez, according to an Occidental statement. It previously announced that former Chief Executive Officer Stephen Chazen will return as chairman.
Crucially, the board will create a new committee to explore “inquiries or indications of interest†from buyers for Occidental or its assets, the statement said. In exchange, Icahn has agreed to withdraw his slate of nominees, and will drop his lawsuit against the company in the Delaware courts.
The new directors will also sit on the other newly-reconstituted board committees, the company said.
Occidental shares were down 2.8% at 10:43 a.m. in New York trading, after earlier rising as much as 4.9%.
Icahn started building a stake in Occidental last May, when Hollub made an aggressive play to outbid Chevron Corp. for Anadarko Petroleum Corp. She won, and while the $37 billion transaction was completed in August, the difficulties only mounted from there.
Icahn called the deal “one of the worst disasters in financial history,†criticized Hollub for taking $10 billion in expensive financing from Warren Buffett and the board for having inadequate oversight of its CEO.
He increased his position in Occidental this month to become its second-largest shareholder after oil prices collapsed due to the coronavirus crisis and demanded the company explore a sale.
While the deal with Icahn ensures some stability at board level, Occidental’s big challenge is its nearly $40 billion of debt, mostly incurred in the Anadarko deal.
Executives have opened talks with debt and equity investors about ways to meet upcoming maturities. The company has a revolving credit facility that should help it through this year, but in 2021 has a wall of maturities that cannot be covered with internally-generated cash flow with oil below $25 a barrel, according to Raymond James.
It also faces potential anger from its staff. In a bid to save cash some employees will have their pay reduced by 30% while CEO Hollub’s salary will be reduced 81%, according to people familiar with the matter. The company also reduced its capital budget for the second time this month, putting it at almost 50% below its original plan. It also cut its dividend for the first time in almost 30 years.
“We will continue to take actions as necessary to further strengthen our balance sheet and ensure the long-term viability of our business,†Hollub said in a separate statement.
Source: Bloomberg
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Valaris Limited announced new contracts awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2023. Three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee. 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in second quarter 2023. 70-day contract with Beach Energy offshore New Zealand for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million. President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.” Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.” Updated Guidance As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, we are updating our first quarter 2023 and full-year 2023 guidance provided on our fourth quarter 2022 conference call on February 21, 2023. First Quarter 2023 Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million. Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Full-Year 2023 Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on our fourth quarter 2022 conference call. Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion. Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Capital expenditures are expected to increase by $60 million to $320 million to $360 million. Source: Valaris Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Seadrill Limited announced that the West Neptune has executed approximately six months of term extensions with LLOG Exploration Offshore, L.L.C in the US Gulf of Mexico. The extensions will commence in direct continuation of the existing term, and will keep the rig busy until Q3 2024, furthering Seadrill and LLOG’s long-term association. Total contract value for the extension is approximately $79 million. Source: Seadrill Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Semisub rig owner Dolphin Drilling has inked a new contract with Peak Petroleum in Nigeria for its 1974-built Blackford Dolphin. The firm contract, which follows the letter of award in January, gives the Euronext Growth-listed owner of three rigs the potential to extend the unit’s backlog by a minimum of 120 days and up to 485 days. The deal adds to and will be a direct continuation of the previously announced 12-month contract with General Hydrocarbon Limited (GHL). Øystein Stray Spetalen-backed company said the effective dayrate associated with the minimum firm period of the contract is $325,000, including the mobilisation fee. “The final award of the contract for Blackford Dolphin shows the opportunities in Nigeria at a strong dayrate, in addition to building on the backlog for the rig. It also underlines the attractiveness of our assets, and we look forward to returning to revenue-generating operations in 2023,” noted Bjørnar Iversen, CEO of Dolphin Drilling. Source: Dolphin Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
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