Please ensure Javascript is enabled for purposes of website accessibility

Carl Icahn Boosts His Occidental Petroleum Stake Up to 10%

By Matthew DiLallo - Mar 12, 2020 at 10:14AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The long-time critic of the beleaguered oil giant could press for management changes.

Carl Icahn has increased his stake in oil giant Occidental Petroleum (OXY 2.55%) from 2.5% to 10%, according to a report by the Wall Street Journal. The activist investor made the move as the oil giant's shares cratered this week following a historic crash in oil prices

Icahn has been highly critical of Occidental Petroleum's management team because of how they handled the $55 billion acquisition of Anadarko Petroleum. The company structured the highly controversial transaction so that it didn't need to obtain shareholder approval. That resulted in it taking on a significant amount of debt, which is putting intense pressure on its balance sheet now that crude prices have cratered.

Oil pumps surrounded by water.

Image source: Getty Images.

That's forcing Occidental Petroleum to take drastic actions so that its financial condition doesn't deteriorate further. These moves have included slashing its dividend by 86% and reducing its capital budget range down to $3.5 billion-$3.7 billion, about a $1.7 billion cut. Those changes will enable Occidental Petroleum to generate enough money to cover its reset dividend and reduced capital spending level on the cash flow it can produce at oil prices in the low $30s.

These changes, while necessary in light of the company's financial situation, likely aren't enough to satisfy Icahn. He's seeking control of the company's board to potentially oust its management team, who he believes pushed through the Anadarko deal to preserve their jobs at the expense of shareholders. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Occidental Petroleum Corporation Stock Quote
Occidental Petroleum Corporation
$57.52 (2.55%) $1.43

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.