With a $38 billion bid on April 24 for rival oil producer Anadarko Petroleum Corp., Occidental Petroleum Corp. CEO Vicki Hollub has again grabbed the spotlight, as the oil and gas industry trailblazer squares off against Chevron Corp., a company four times Occidental’s size.
RELATED: Occidental Petroleum Kicks Off Anadarko Bidding War With Chevron
Hollub, the first woman to become CEO of a major oil company, rose through the ranks after earning a degree in mineral engineering. She turned around a business that lost $1.09 billion in 2016 and last year tripled profit, to $4.1 billion.
By challenging Chevron for a takeover of Anadarko, she is betting she can convince investors that she is able to run a much bigger business. Anadarko has deepwater fields and is moving into LNG, two areas where Occidental has no experience. Chevron offered $33 billion for Anadarko earlier this month.
Anadarko’s board said it would study the Occidental offer. Occidental and Chevron want Anadarko’s nearly quarter-million acres in the Permian Basin, the top U.S. shale field.
Many on Wall Street were stunned by the $76 per share bid which is valued at $57 billion including debt. KeyBanc Capital Markets downgraded Occidental stock to sector weight from overweight. Moody’s Investors Service placed Occidental’s ratings under review for possible downgrade.
“She’s staking a lot of the company’s and her reputation on a potential Oxy-Anadarko merger,” said Brian Kessens, portfolio manager at Tortoise Capital, which holds shares in an Anadarko pipeline business and in Chevron. He considers the Anadarko deal a kind of “merger of equals” compared to a potential takeover by the much larger Chevron.
The deal would double in one swoop Occidental’s oil and gas output, to 1.4 million barrels per day. The combination also would boost Occidental’s free cash flow and help the company raise its dividend over time, Hollub said.
Hollub, who became CEO in 2016 after leading Occidental’s Permian Basin operations, turned the company into one of the largest producers in the Permian. It also has emerged as one of the biggest exporters of U.S. shale oil, rivaling large trading firms and oil majors.
But during her tenure as CEO, investors fled oil exploration stocks and have turned thumbs down on Occidental’s shares. The company has lost about 23% of its value compared to a 4.8% decline in the S&P oil and gas exploration index during the same period.
“Vicki is a rare leader who is running a marathon, not a sprint,” said Katie Mehnert, CEO of Experience Energy and PinkPetro, a women-in-energy advocacy group. “She’s leading her company with a long-term view, and that’s a very difficult thing in a world that responds to Twitter. She’s focused and going long.”
Last month, Hollub used her star power to put together a meeting between energy industry executives and Secretary of State Mike Pompeo, who urged the industry to support U.S. foreign policy goals.
“We need more women CEOs in our industry so she’s a great role model,” Melody Meyer, a board member of BP Plc who has known Hollub for between 10 and 15 years.
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