By Irina Slav
Occidental Petroleum will cut certain employee salaries by 30 percent in response to the sharp drop in oil prices, Reuters said reportedrelying on an internal document. CEO Vicki Hollub will cut her salary by 81 percent, as the memo showed.
The shale oil major last year acquired Anadarko is the largest oil producer in the Permian, but with falling prices, its production costs are now exceed the benchmark WTI that has slumped to less than $ 24 a barrel.
Debt is also a problem. Oxy agreed to pay $ 55 billion in cash to Anadarko, giving him total debt $ 39 billion. His stocks have lost 75 percent since the price war began, and Moody’s last week downgraded his bonds to junk status.
Oxy planned to sell $ 15 billion in assets to pay off the debt, but these plans encountered delays and obstacles, and now that the price of oil is falling, unloading could prove a difficult task.
“In this unprecedented time that is affecting our industry and the global economy, we are taking aggressive measures to ensure the health of the company while protecting jobs,” spokeswoman Melissa Schoeb said in a statement quoted by Reuters.
“We have informed our employees about a number of measures that we will implement, including compensation cuts that affect all employees of the company, starting with the management team,” said Schoeb.
The pay cut affects employees who earn more than $ 76,000 a year.
Earlier this month, in response to the price radio, Occidental cut its spending plans by $ 1.9 billion and cut dividends. Reuters anticipates annual savings of $ 4.1 billion to $ 4.3 billion reported.
Occidental is far from the only cost reduction. Across the U.S. oil industry, companies have already announced spending cuts of 30 percent on average, according to Reuters Dataand many expect production restrictions. The international list of reduced expenses includes super majors such as Exxon, Chevron, Shell, Total and Eni.
By Irina Slav for Oilprice.com
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