No. of Recommendations: 6
Hollub's big mistake was overpaying for Anadarko. She paid $57B, or $38.70/barrel of oil equivalent (boe) of proven reserves, when other mergers were running at about half that cost. As Hollub has stated, she wanted to focus on domestic oil production, she wanted to buy proven oil reserves, she wanted to buy reserves adjacent to existing OXY infrastructure, and she wanted to use enhanced oil recovery (EOR) using carbon dioxide (all good ideas). She also wanted to use direct air capture (a questionable idea, when direct air capture produces CO2 at $400/tom versus commercial CO2 at $78/ton).
OXY's stock had already fallen from $110 to $51 before Occidental stared bidding against Chevron for Anadarko, an acquisition that analysts panned, and which ended up costing OXY $57B. OXY stock bottomed about a year later at $9.68. It's hard to get a good return on your stock when you start off with an 89% decline in the first year after an acquisition.
