Occidental Plans to Name Former CEO Chazen as New Chairman
20 March 2020 - 9:58AM
Dow Jones News
By Cara Lombardo
Occidental Petroleum Corp. plans to bring back former Chief
Executive Stephen Chazen as its new chairman, according to people
familiar with the matter, as the oil producer scrambles to right
itself amid plunging demand and an activist onslaught by Carl
Icahn.
Mr. Chazen, a heavy hitter in the energy world, led Occidental
for roughly five years until 2016 and handpicked current CEO Vicki
Hollub. His appointment could be announced in the coming days,
assuming discussions don't fall apart.
The move is likely aimed at mollifying Mr. Icahn and avoiding a
costly and distracting proxy fight at Occidental's annual meeting
later this year. Mr. Icahn had tried to recruit Mr. Chazen for the
slate of directors he nominated in November. Mr. Chazen at the time
was reluctant to get involved unless it would help Ms. Hollub clear
an impasse with the billionaire activist, The Wall Street Journal
has reported.
It isn't clear whether the appointment will have the desired
effect. Mr. Icahn's camp has more recently been critical of what it
sees as Mr. Chazen's role in setting the strategy that led to the
company's current woes.
Mr. Chazen, who was an investment banker at Merrill Lynch before
a long career at Occidental, is now chief executive of Magnolia Oil
& Gas Corp., an independent producer, and is expected to
continue in that role.
The recent plunge in oil prices, due to the novel coronavirus
outbreak and a price war between Russia and Saudi Arabia, has
devastated Occidental, which just last year loaded up with debt for
the $38 billion purchase of Anadarko Petroleum Corp. That deal now
looks like one of the most ill-timed acquisitions in history.
Occidental's shares have lost nearly 90% of their value in less
than two years and closed Thursday at $10.83. Its market value has
shrunk to less than $10 billion from well over $40 billion before
the Anadarko deal was struck last spring. It also has so far been a
money-losing position for Mr. Icahn, who owns roughly 10% of the
company after scooping up additional shares last week.
Occidental has already added new directors in recent months,
including former Schlumberger Ltd. CEO Andrew Gould, to strengthen
its standing with shareholders who would ultimately decide any
proxy fight. Energy executive Jack Moore was set to take over as
chairman from Gene Batchelder before Mr. Chazen entered the mix.
Occidental has been considering adding other new blood to its board
including former Anadarko Chief Executive Jim Hackett, some of the
people said, though it isn't clear where those discussions
stand.
Mr. Icahn and Occidental representatives have spoken briefly in
recent days and both sides are motivated to prevent the fight from
going all the way to a shareholder vote, some of the people said,
but they haven't held substantial settlement discussions. Mr. Icahn
wants to ensure Occidental's board will seriously consider any sale
offers should oil prices recover and consolidation in the industry
occur.
Mr. Icahn had accused Ms. Hollub and the board of buying
Anadarko to avoid an acquisition of the company itself and
criticized its use of pricey financing from investor Warren
Buffett.
Occidental said last week it would shrink its dividend and cut
costs, moves that would allow it to roughly break even with U.S.
benchmark oil prices in the low $30s a barrel. Oil prices rallied
Thursday after hitting the lowest level in nearly two decades,
closing at around $25.
Write to Cara Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
March 19, 2020 18:43 ET (22:43 GMT)
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