Occidental Petroleum Corp (N:OXY) will cut employee salaries by up to 30%, according to an internal memo reviewed by Reuters, 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 demand has plunged because of the coronavirus pandemic that threatens to cause a global recession and as Saudi Arabia and Russia plan to increase supply to grab market share.
Occidental has pared spending on production, cut its shareholder dividend, dismissed staff and sold assets to avoid being overwhelmed by the debt taken on to pay for its $38 billion acquisition of rival Anadarko Petroleum (NYSE:APC).
The deal was an ill-timed bet on rising oil prices that soured within months of the deal’s closing. Crude oil (LCOc1) traded at $27.64 a barrel Wednesday morning in Asia, below the level that Occidental recently said it needs to cover expenses.
“During this unprecedented time impacting our industry, and the global economy, we’re taking aggressive actions to ensure the health of the company while protecting jobs,” company spokeswoman Melissa Schoeb said in a statement.