Key takeaways from Iridian Asset Management’s 4Q14 Holdings (Part 5 of 8)
(Continued from Part 4)
Iridian sells its stake in Occidental Petroleum
Iridian exited its position in Occidental Petroleum Corp. (OXY). The fund previously had an exposure of 1.98% to the company in its 3Q14 portfolio. The iShares S&P 500 Index ETF (IVV) has a 0.34% holding in Occidental Petroleum.
Overview of Occidental Petroleum
Occidental is a global gas and oil production and exploration company, with operations in Latin America, the Middle East, and the US. The company operates in three major segments: the chemical segment (OxyChem), oil and gas segment, and the marketing, midstream, and other segment.
The oil and gas segment produces, develops and explores for condensate and oil, natural gas, and natural gas liquids. The chemical segment, mainly markets chlor-alkali products. The marketing and midstream division markets, purchases, transports, stores, processes, and gathers power, carbon dioxide, natural gas, natural gas liquids, condensate, and oil.
Occidental agrees to $500 million deal for Abu Dhabi offshore exploration
Occidental Petroleum would have a share of 30% in a deal for offshore exploration within Abu Dhabi. Occidental was among 11 global oil companies that were invited to participate in a bid for rights to develop the assets of Abu Dhabi in 2012. The company plans to work in cooperation with Abu Dhabi National Oil Company to explore the Ghasha and Hail offshore fields within the Persian Gulf.
The company anticipates a share of 30% in the exploration project, which is expected to last through 2017. The agreement involves drilling appraisal wells, three-dimensional seismic surveys, and carrying out engineering studies needed for the development of the fields.
Occidental streamlines its business
In February 2014, Occidental announced the spin-off of its California Resources Corporation, the company’s wholly owned subsidiary. Following an approval from the board of directors in October, the transaction was finalized by the end of November. This strategic divestiture is expected to enable the company increase its focus within Permian.
Occidental also announced the sale of its interest in the BridgeTex pipeline, generating $1.15 billion in proceeds. This move would enable the company to reinvest in domains where the company has scale and depth.
Satisfactory operational performance in 2014
Occidental grew its production for Permian resources from 65,000 barrels of oil equivalent per day (boepd) in 2014 to 75,000 boepd. The company grew its domestic oil production to 181,000 barrels per day in 2014, an improvement of 11,000 barrels per day over its 2013 figure.
The capital program of the company added 395 million barrels of oil equivalent (MMboe) of proved reserves during 2014, amounting to a 181% replacement ratio, prior to dispositions. Generally, a reserve replacement ratio of at least 100% is desired during times of stable demand in order for the company to stay profitable in its business.
Iridian’s key position changes for 4Q14
Iridian initiated new positions in Micron Technology (MU) and Targa Resources (TRGP). The fund exited its position in FMC Corp. (FMC) and Occidental Petroleum Corp. (OXY). Iridian adopted a bullish stance to Masco Corp. (MAS) and a bearish stance with respect to NCR Corporation (NCR) and AutoZone (AZO).
We will cover Iridian’s staggering increase in its holdings of Masco Corp. in the next part of this series.
Continue to Part 6
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