THE OUTLOOK FOR OCCIDENTAL : Host of Nagging Problems Awaits Occidental’s Ray Irani : Management: A high dividend, $8 billion in long-term debt and subsidiaries that are vulnerable to a possible takeover top a list of issues to be dealt with.

Armand Hammer’s death has called into question the future of Occidental Petroleum Corp., the quirky Westwood oil company that carried his imprint for more than 30 years as he transformed it into the nation’s 16th-largest industrial company.

On Tuesday, Wall Street interpreted Hammer’s death as leaving the oil and chemical company vulnerable to takeover or to being sold off in pieces.

Heavy trading fueled a spike in the stock of Occidental and IBP Inc., the Nebraska-based meatpacker in which Occidental has a controlling interest.

Some analysts believed that Hammer’s handpicked successor, President Ray R. Irani, would now be free to deal with Occidental’s nagging problems, including a dividend level many observers believe is too high, $8 billion in long-term debt and subsidiaries that are ripe for sale.

But many who follow the company argued that little would change at Occidental in the short term. George Keller, former chairman of Chevron Corp., summed it up roughly this way: The king may be dead, but the prime minister and parliament live on.

Analysts believe that Irani, who was unanimously endorsed by Occidental’s board last spring, will assume control of Occidental in a deliberate fashion.

The veteran chemical industry executive will succeed Hammer as Occidental’s top executive after serving a six-year apprenticeship in the No. 2 spot--a job that had been occupied by five other executives in the past 20 years, all of whom left the company after falling out with Hammer.

Irani has been running the day-to-day operations at Occidental for some time, observers said. In an interview last March, he was only too glad to praise Hammer and downplay his own role in the company. But analysts and Occidental board members clearly believe that Irani is fully capable of taking over.

“All of the directors have full confidence in him, as they had with Dr. Hammer,” said longtime director Louis Nizer, a New York attorney. Nizer added that--”without mentioning specifics”--Irani had assured him that he would hold to the course charted by Hammer.

Hammer’s passing means “you’re missing . . . an internationally known entrepreneur, whether it meant anything or not, who was able to walk in and tell George Bush or Richard Nixon or Ronald Reagan, ‘This is what those guys in the Kremlin are talking about,’ ” said Andrew Gray III, an industry analyst at Pershing & Co. in New York.

But Gray compared Irani favorably to Hammer, the consummate deal maker: “Irani is the same type of guy Hammer was when Hammer started out in this whole business.”

Neither Irani nor spokesmen for Occidental would comment on any changes at the company.

Analysts credit Irani with focusing Occidental on chemical operations in the past few years, including its $2.2-billion takeover of Cain Chemical in 1988. Such operations contribute most of Occidental’s operating income. In the first nine months of 1990, Occidental reported net income of $306 million on revenue of $15.6 billion.

On Tuesday, Occidental’s stock was the most active issue on the New York Stock Exchange. It rocketed on news of Hammer’s death by as much as $3 a share before moderating to close at $22.625, up $1.875 on the day.

The move was based largely on speculation that a buyout was imminent. But most analysts doubted that one was likely, arguing that the climate is wrong for a takeover. Such a bid would cost $18 billion to $20 billion, said Eugene Nowak, an analyst at Dean Witter Reynolds in New York.

British Petroleum, often mentioned as a possible buyer for the company, brushed off suggestions that it might make a play. “I can emphatically deny that,” said Bob Horton, BP’s chairman, who was in Carlsbad, Calif., at a meeting of oil analysts. “We have no interest in it whatsoever.”

Out of Hammer’s shadow, analysts said, Irani can be expected to take steps that Hammer refused to consider. There is a good chance that Irani and his chief lieutenant, Executive Vice President Dale R. Laurance, will take a close look at assets that may be non-strategic to the longstanding goal of sculpting Occidental into a fully integrated petrochemical company.

Irani is less married to certain Occidental assets and operations than Hammer was, analysts said.

About a month ago, Laurance told one analyst that “we have several different businesses, some of which we don’t want to be in,” the analyst said.

The likeliest candidate for sale is Occidental’s stake in meatpacker IBP. Sale of Occidental’s 51% interest would bring in as much as $600 million in cash and $400 million in debt relief, Gray said. Possible buyers would include European or Japanese investors eager for a foothold in the U.S. meat industry.

On Tuesday, IBP, whose stock is traded separately, was the NYSE’s second most active issue, closing up $2.625 a share at $19.

Last March, Irani said he had turned down several offers to buy IBP. Selling the meatpacker would drop Oxy from 16th to about 40th on the roster of the nation’s biggest industrial firms.

But other subsidiaries--including MidCon Corp., a natural gas pipeline company, and Island Creek Corp., a coal company--would have a hard time attracting buyers, analysts said. In any case, “there’s no wholesale need for disposition of assets (immediately),” Nowak said.

Bryan Jacoboski, oil industry analyst at Paine Webber, said Occidental would be under greater pressure to sell off assets if the economy continues to weaken next year. And in any event, Irani and Laurance will need to reduce Occidental’s debt, which is a little more than $8 billion--more than half the firm’s total capital.

“They don’t have the the ability to pay down their debt without selling assets,” said Robin Shoemaker, an analyst at Shearson Lehman Bros. “They have used cash generated by operations to fund capital spending and to pay their stock dividend.”

What to do with that dividend is another big challenge facing Irani. Occidental’s traditional annual dividend of $2.50 has long exceeded Occidental’s earnings. Last March, Irani said the dividend would not change.

Nowak argued that the dividend hasn’t hurt Occidental’s willingness to invest so far.

Moreover, the dividend has been a main attraction to the small investors who are disproportionately owners of Occidental--the same people who used to sing “Happy Birthday” to Armand Hammer during shareholders’ meetings. Cutting the dividend could drop the stock even further, making Occidental that much more vulnerable.

Gray said it won’t be long before earnings cover the dividend--as little as 12 to 15 months, especially once new oil production from the British North Sea comes on line.

Occidental’s board is scheduled to convene Thursday in Los Angeles, after a memorial service for Hammer. “All of this is premature until we have our first board meeting,” said director and Los Angeles lawyer Arthur Groman. “Any particular change in course remains to be seen.”

OCCIDENTAL PETROLEUM AT A GLANCE

Occidental is a worldwide gas and oil exploration company with extensive operations in chemicals, coal and natural gas transmission. It also owns 51% in IBP, a meat processor. Oxy has headquarters on Wilshire Boulevard in Los Angeles.

Assets (1989): $20.7 billion

Employees: 53,500

Shares outstanding: 294.6 million

12-month price range: $17.75-$30.50

Tuesday close (NYSE): $22.625, up $1.875

Source: Standard & Poor’s

Times staff writer Jesus Sanchez contributed to this story.