Occidental Petroleum Corp. may consider selling its overseas assets or splitting into three separate companies in order to fund a stock buyback and improve its share price, Chief Executive Steve Chazen told investors this week.
According to analysts at UBS Securities, during a conference hosted by the bank in New York on Wednesday Mr. Chazen said selling assets to reduce the size of the company may be necessary for shareholders to realize greater value from the Los Angeles-based oil and gas producer.
Among the scenarios Occidental is considering are selling its Middle Eastern business, which includes onshore and offshore oil and gas projects in Qatar and Oman, according to UBS.
Mr. Chazen also discussed splitting the company into three businesses: one focused on the overseas assets, another focused on oil production in California, Colorado and the Bakken oil fields, and a third focused on the company's 1.7 million acres in Texas and New Mexico's Permian Basin, according to UBS.
"In our view, Mr. Chazen's commentary clearly implied that any restructuring strategy would likely focus on larger-scale restructurings with potential to 'move the needle' in terms of valuation," UBS said in a note to investors.
An investor who attended the UBS conference confirmed UBS' description of Mr. Chazen's comments. The company declined to comment.
Mr. Chazen's comments are the first significant signs of a possible restructuring at the company since shareholders overwhelmingly voted to remove Executive Chairman Ray Irani at the company's annual meeting earlier this month.
A number of oil and gas companies have sold assets and spun off entire business units in recent years in response to investor pressure, but Occidental had largely been spared such prodding.
The company had underperformed since Mr. Chazen took over the CEO post from Mr. Irani in May 2011 following a shareholder-led push against Mr. Irani due to his pay package. But analysts reacted positively in research reports to cost-cutting plans announced by Mr. Chazen in late 2012, and he remained popular with investors.
In February the company announced plans to seek a replacement for Mr. Chazen, a move that was seen as sudden and unnecessary by many investors and analysts. In March The Wall Street Journal reported that the move followed an effort by Mr. Irani to replace Mr. Chazen with a former company executive.
The company's board said the decision to look for a successor to Mr. Chazen came after long deliberations, but investors openly criticized the plan, which led to a groundswell of opposition to Mr. Irani's reelection.
Copyright (c) 2012 Dow Jones & Company, Inc.
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