(Reuters) - Occidental Petroleum Corp on Thursday warned of asset writedown of up to $9 billion in the second quarter and said it would restructure some of its debt to avoid a possible default.
The oil producer said it will buy back a part of its $9.12 billion outstanding senior notes due in 2021 and 2022 by issuing new high-yielding notes, while also looking to remove some covenants and events of default from the old notes.
Occidental will once again pay Berkshire Hathaway Inc, which last year bought $10 billion worth of its preferred shares to help acquire Anadarko Petroleum, in stock dividend instead of cash on June 30.
The beleaguered oil and gas producer has been struggling to deal with the nearly $40 billion of debt it took on to buy Permian focused rival Anadarko last year, an ill-timed bet on rising oil prices.
But the coronavirus outbreak and a price war between Saudi Arabia and Russia sent crude prices tumbling in March, forcing Occidental and its shale peers to cut spending and find ways to clean up their balance sheets to survive the downturn.
Occidental is taking massive writedowns for the third straight quarter, with its forecast of between $6 billion and $9 billion, which is roughly half of its total market capitalization.
Last month, the company said it was looking at a series of options to shore up its impaired balance sheet, including raising cash or refinancing debt.
The company also said it expects preliminary oil and gas production from continuing operations for the second quarter to lean toward the high-end of range of 1.3 million-1.4 million barrels of oil equivalent (boe) per day.
Reporting by Shradha Singh and Shariq Khan in Bengaluru; Editing by Arun Koyyur