Occidental Petroleum Corp (OXY.N) on Wednesday unveiled a new round of deep spending cuts, slashing budget for a second time this month and sharply reducing salaries, as the debt-laden U.S. oil producer tries to save cash amid tumbling energy prices.
Global oil prices have dropped 60% since January as fuel supply piles up because of the coronavirus pandemic that threatens to cause a global recession and as Saudi Arabia and Russia plan to pump more oil to grab market share.
Globally-traded brent crude was down 2.5% at $26.48 on Wednesday.
Occidental now plans to spend about $2.8 billion on production in 2020, almost half its original budget of about $5.3 billion.
Oil and gas production will fall about 6% below a prior forecast, and salary and other expense cuts will save the firm another $600 million this year, the company said.
Some of Occidental’s U.S. workers will have their pay cut by 30% and others, including those covered by the Anadarko acquisition agreement, will see smaller cuts.
Chief executive officer Vicki Hollub, who championed the company’s ill-timed $38 billion Anadarko acquisition, will take a pay cut of 81%. Salaries of other top executives will be reduced by an average of 68%, according to the memo.
“We now expect to significantly lower our costs in all aspects of the business,” Hollub said in a statement, adding the company “will continue to take actions as necessary to further strengthen our balance sheet and ensure the long-term viability of our business.”
The company said it expects the latest round of cuts to lower domestic operating costs to $7 per barrel of oil equivalent (BOE).
Occidental had already pared spending and cut its shareholder dividend by 86% earlier this month. It has also dismissed staff and sold assets to avoid being overwhelmed by the debt taken on to pay for the Anadarko deal.
In a separate statement on Wednesday, Occidental announced a settlement with Carl Icahn, adding three of the activist’s associates to its board and ending a bitter fight that began with the Anadarko deal.