Oxy shows confidence in its balance sheet with Buffett dividend payment

(Bloomberg) --Occidental Petroleum will pay about $200 million in dividends on preferred shares to Warren Buffett’s Berkshire Hathaway Inc. in cash rather than common stock, a sign of the shale driller’s growing confidence in its ability to manage its debt load.

The $2,000-per-share payout on Occidental’s series A cumulative perpetual preferred stock will be paid on Oct. 15, the company said in a filing on Monday.

Occidental had been making the payments with stock since April to conserve cash as it sought to fend off crude’s worst price-collapse in a generation after borrowing massively to buy Anadarko Petroleum Corp. last year.

“This likely indicates that the company is feeling better about its balance sheet and liquidity situation and may have more confidence in its ongoing asset sales processes,” Leo Mariani, an Austin-based analyst at KeyBanc Capital Markets Inc., wrote in a note to clients.

With long-term debt more than three times its market value, Occidental has been hit harder than many by the pandemic-induced drop in oil prices. But the company has been chipping away near-term obligations with a series of bond sales and last month agreed to sell land rights in the Rocky Mountains for $1.3 billion.