The energy crisis caused by the COVID-19 pandemic is forcing Occidental Petroleum Corp, a major operator in the Permian Basin to offer its employees voluntary buyouts over the next two weeks.
Reuters reports a company document cites the sharp decline in oil prices and the pandemic for what Occidental executives call “severe dislocations” in its business.
Occidental bet heavily on the continued growth in U.S. shale oil, taking on heavy debts for its controversial purchase of Anadarko Petroleum last year for $38 billion. That bet has proved ill-timed following the coronavirus outbreak, which has cut fuel demand worldwide by about 30% and is responsible for the worst oil-and-gas-industry downturn in 40 years.
Houston-based Occidental last week posted a $2 billion quarterly loss and has slashed capital spending drastically to shore up its balance sheet. The company said that if spending cuts are not met, it will have “serious potential consequences” to the company, the document said.
Interested employees can submit a resignation offer to Occidental through May 26, specifying the number of months of base salary that they will accept for voluntary separation, according to the document. Employees can amend or withdraw offers unless the company has already accepted them by then, the document said. Offers not accepted will expire automatically on June 12.
Occidental declined to comment.
The company’s shares are down 64% on the year, making it one of the worst-performing stocks in the Standard & Poor’s 500 stock index .SPX.
Occidental has been cutting expenses to deal with its debt-laden balance sheet and had been laying off workers and selling assets to pare down debt even before the fall in oil prices.