Occidental Petroleum Corporation (NYSE:OXY) Q2 2020 Earnings Conference Call - Final Transcript
Aug 11, 2020 • 11:00 am ET
We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Brian Singer of Goldman Sachs. Please go ahead.
Thank you, and good morning.
I appreciate the greater color with regards to the maintenance scenario, and you talked about not wanting to really invest for growth until the balance sheet is sufficiently delevered. Can you add some greater color on what commodity environment and leverage would you deploy the maintenance scenario that you talked about here versus something more or something less?
Well, what we're looking at as we go forward is our debt reduction combined with our cash flow from operations. So the driver for us is to, first of all, ensure that we have the liquidity to go forward, so we have the ability to meet our maturities. And then the second is to ensure that as we're processing through our asset sales, that we're preserving the cash flow needed to enable us to do the things that we need to do, sustaining capital. And ultimately, when we get to the point where we see that, that balance has turned for us, where we have a lower cost structure that enables us still to meet our maturities with cash flow from operations, that's the point at which we would start to consider the next level down on the cash flow priorities which is growth after the dividend. So it'd be first, the maintenance, second, debt reduction, then sustainable dividend, and then growth.
And is it fair to say that at current commodity prices, you would want to be in that maintenance mode? Or would you be in sub-maintenance mode?
It really depends. We intend to, if we're within cash flow, to sustain our production. So that's the intent. That's -- and in 2021, with such a low sustainability capital required, we do expect to be in that mode at least.
Great. And then my follow-up is with regards to the asset sale targets. The Greater Natural Buttes sale brought in $69 million. Your goal is $2-plus billion. Can you just give us any color on how that's progressing? And then if there's any broad range, when you talk about the $2 billion-plus of the EBITDA or how much EBITDA you would expect to be to -- would be given up to achieve that target.
Well, first of all, I will say we're on track with our asset divestitures. It's going well. We reported in the last earnings call that we had just completed Round 1 of the Land Grant process. And in that process, we got 13 bidders. We had commented that we expected that with the process, that we would be able to close on the Land Grant acquisition in the third quarter or fourth quarter. That'd be late third or early fourth quarter. We're still on schedule for that. And the update on the progress there is that after the first round, we went through and evaluated those bids, then we