Occidental Petroleum Corp. stock fell to a 52-week low Thursday in volume-leading activity on the New York Stock Exchange. Analysts attributed the heavy trading to expectations that the Los Angeles-based oil firm would soon announce plans to cut its dividend and sell some assets.
In the wake of the Dec. 10 death of longtime Occidental Chairman Armand Hammer, industry observers have expected the oil firm to restructure, with the aim of reducing its massive $8 billion in long-term debt.
Hammer’s handpicked successor, Ray R. Irani, plans to meet with industry analysts Monday in New York City. However, Occidental executives refused to comment on the subject of Irani’s presentation. Nor would the company comment on speculation that its board was to meet today in Los Angeles.
Occidental stock fell $1 to $17 on very heavy volume of 2.1 million shares. The stock, which traded at $22.50 shortly before Hammer’s death, has been as high as $30 in the past year.
“I expect the announcement of a large cost-reduction plan,” said Robin Shoemaker, an industry analyst at Shearson Lehman Hutton in New York. “I believe there will be a work force reduction and a good chance of a dividend cut.”
Shoemaker said many of those selling shares Thursday had bought them for their high dividend value. Occidental’s traditional annual dividend of $2.50 a share--considered sacrosanct under Hammer--has long exceeded the firm’s per-share earnings, he noted.
In the first nine months of 1990, Occidental reported net income of $306 million on revenue of $15.6 billion. The firm has not yet announced its 1990 annual earnings.
“There wouldn’t be any point in shaving the dividend slightly,” Shoemaker said. “If they cut it, they will cut it by half at the very least. It would be a good move. It would allow the company to use the money to reduce the debt.”
Industry analysts said Occidental may be preparing to sell IBP Inc., the Nebraska-based meatpacker in which it has a controlling interest. Sale of Occidental’s 51% interest could bring as much as $600 million for the debt-relief effort, analysts have said.
“Selling IBP would be smart and would bring the company strongly back into the energy fold,” said Maria Della Pella, an analyst at Prescott, Ball & Turben in New York. “The company could begin to concentrate more on oil and gas operations.”
IBP, whose stock is traded separately, rose $1.875 Thursday to close at $21.875.
However, Occidental would not comment on the possibility of a dividend cut or speculation about any restructuring plans. IBP executives also declined comment.
Occidental on Dec. 21 put its stake in IBP into a holding company called Occidental Agribusiness Investments Inc. Thomas Samuelson, an analyst with Duff & Phelps in Chicago, said the transfer may have been made in anticipation of putting IBP on the block.