Is the oil supply safe
Is the Western Oil Stock a Buy?
The last two years haven't been perfect for me Occidental Petroleum (NYSE: OXY). Part of it has to do with the larger energy market, but a good part also has to do with company-specific decisions. When you view Occidental as a way to invest in the energy recovery industry today, there are a few things to consider before you step on board.
1. Aggressive acquisition
The problems Occidental faced in 2020 were exacerbated by the decision management made in 2019. But there's a bit of history here. Giant of the energy industry Chevron (NYSE: CVX) agreed to buy Anadarko Petroleum for $ 50 billion. including the debt she would take on from Anadarko. Wall Street valued the deal as it fit well with Chevron's business and the company's reach in America's land ace and in the Gulf of Mexico, among others. Chevron could easily handle the size of the business. Only Occidental, a much smaller oil company, made the decision to place a higher bid on Anadarko.Image source: Pictures.
In the end, Occidental won with "useful" funds from Berkshire Hathaway. However, the roughly $ 57 billion tagged with that tag contained a lot of evidence that the company wasoverpaid and possibly bitten more than it could chew. Meanwhile, the finance deal with Berkshire has been described by investment legend Carl Icahn as "taking candy from a baby," implying that the energy company was paying a heavy price for the money it needed to make. Anadarko. And that was it before the coronavirus pandemic. 2. And then it got worse
So Occidental 2020 started out with heavy debt and a large oil company to integrate into its own operations. It was going to be a difficult year no matter what. But then things got really ugly when economic shutdowns were put in place to slow the spread of the coronavirus, which revitalized the oil market. The main US benchmark, West Texas Intermediate, fell below zero early onwhich meant that oil companies were effectively paying customers to take their oil.
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