Occidental Petroleum Corp., the 13th-largest oil company in the U.S., on Monday slashed its spending on exploration and production of oil and natural gas by 63% to cope with low energy prices.
Los Angeles-based Occidental, with 1997 revenue of about $8 billion, reported to the Securities and Exchange Commission this month that it's facing a cash shortfall for 1998 that may force it to sell assets, restructure debt and cut spending. Occidental reports fourth-quarter earnings today.
Los Angeles-based Occidental joins larger rivals such as Texaco Inc., Mobil Corp., Atlantic Richfield Co. and Unocal Corp. in trying to weather oil and natural gas prices--hovering near decade lows--by cutting costs through spending cuts, job cuts and suspension of projects.
The company said it will spend $275 million on exploration and production, down from $740 million last year.
Most of the spending will be in Qatar and in California's Elk Hills field. The company still expects production this year to remain at 1998 levels of about 320,000 barrels of oil and 703 million cubic feet of gas a day.
Occidental said it will spend another $75 million to develop its chemical manufacturing business this year, down from about $320 million last year.
Occidental cut total spending to develop the oil, natural gas and chemicals businesses this year by 67% to $350 million, from $1.06 billion in 1998.
The company said its plan to save $200 million annually within two years, partly through the elimination of more than 1,000 jobs, is on schedule.
The plan, announced in November, will cut overhead costs by almost one-third.
The company said it's developing other cost-cutting initiatives to save another $100 million a year.
Occidental also said this year's quarterly dividend will be 25 cents, the same as last year's.
Occidental shares fell 81 cents to close at $16.13 on the New York Stock Exchange.