•  
  •  
  •  
  •  
  •  
  • Untitled Document
    Untitled Document

    Occidental to sell Argentine assets, buy Bakken, other US asset

    Oil producer Occidental Petroleum Corp. (NYSE: OXY) recently announced plans to pay $3.2 billion for certain US assets while selling assets in Argentina to China for $2.5 billion.   

    Argentine operations 
    Oxy executed an agreement with a subsidiary of China Petrochemical Corp. (Sinopec) to sell Occidental's Argentine oil and gas operations for after-tax proceeds of approximately $2.5 billion. The assets being divested currently produce roughly 44,000 boe/d net to Oxy. When the transaction closes, Occidental expects to report a gain on the sale. 

    South Texas, North Dakota
    Occidental also announced that it had executed agreements to purchase oil and gas properties in South Texas and North Dakota for about $3.2 billion.

    The South Texas assets will be purchased from Shell for about $1.8 billion and currently produce approximately 200 million cubic feet per day of gas equivalent. Shell has owned and operated the properties for many years. The assets will be 100% operated by Occidental and have an excellent inventory of drilling opportunities.

    From a private seller, Oxy will buy nearly 180,000 net contiguous acres in North Dakota which produce from the Bakken formation and are prospective in the Three Forks formation. The purchase price is approximately $1.4 billion. The assets currently produce approximately 5,500 boe/d and Occidental's net risked reserve exposure is in excess of 250 MMboe. 

    Combined with Occidental's other interests in the Williston Basin, Occidental will have an interest in over 200,000 net acres and over 6,000 boe/d of production. Occidental expects to grow production in the Williston Basin to at least 30,000 boe/d over the next five years.

    Plains All-American
    Additionally, Occidental announced that it has signed an agreement to increase its General Partner (GP) ownership in Plains All-American (NYSE:PAA) by 13%, bringing its total ownership in the GP to roughly 35%.PAA's operations compliment Occidental's domestic oil and gas operations. Plains is one of the largest operators of oil pipelines in North America with operations in Texas, California, and North Dakota, among other areas.

    The company will also acquire the remaining 50% joint venture interest in the Elk Hills Power Plant from Sempra Generation, bringing Oxy's interest to 100%. Oxy expects the move to improve efficiency and lower operating costs at Oxy's Elk Hills business unit.

    Management comments
    "These transactions will be immediately accretive to our earnings, return on capital employed and cash flow after capital. With these new acquisitions and without Argentina in our asset mix, achieving both our short-term and long-term average annual production growth outlook of 5-8% will be more certain and will generate higher returns," said Ray R. Irani, chairman and CEO of Occidental.

    "These properties, combined with acquisitions completed earlier this year, will more than replace the production from the sale of Argentina. We expect that each of these new acquisitions together with future drilling, potential exploration and consolidation opportunities in these areas, over time, will grow to over 50,000 barrels of oil equivalent per day (boe/d)."

    "In light of our outlook for improved free cash flow, the Board has agreed to increase our common dividend rate by 21% from 38 cents per quarter to 46 cents per quarter effective with the April 15th payment. The formal dividend declaration will be made by the Board of Directors in February," said Irani. 

    The company will finance the acquisitions from both exisiting balance sheet cash and debt financing, and expects all transactions to be completed no later than the end of the first quarter of 2011. 

    Shares of the company were up +1.480 (+1.625%) at US$92.55 after the announcement.

    Most Popular

    Related Articles

    PAA and Delek Logistics form JV to build Caddo Pipeline

    03/24/2015 Plains All American Pipeline LP and Delek Logistics Partners LP have formed Caddo Pipeline LLC, a 50/50 joint venture, to develop the Caddo Pipeline, an 80-mile, 12-inch pipeline between Longview, ...

    WGL Midstream acquires interest in Mountain Valley Pipeline JV

    03/12/2015 Mountain Valley Pipeline LLC, a joint venture between affiliates of EQT Corp. and NextEra Energy Inc., says that a subsidiary of WGL Holdings Inc., WGL Midstream, has acquired a 7% ownership intere...

    Total to be operator of PNG’s PRL 15 JV

    03/02/2015 InterOil Corp. says that all participants in the Petroleum Retention License (PRL) 15 joint venture have unanimously voted to appoint Total E&P PNG Ltd. as operator of the PRL 15 JV. PRL 15 is ...

    Bounty ends deal to buy stakes in Empire's Carnarvon Basin permits

    02/27/2015 Bounty Oil & Gas NL said on Feb. 27 that the indicative agreement with Empire Oil & Gas NL for Bounty to buy all of Empire’s Carnarvon Basin permit interests in Western Australia held by Em...

    JV formed for Panola NGL Pipeline expansion project

    02/25/2015 Enterprise Products Partners LP, Anadarko Petroleum Corp., DCP Midstream Partners LP, and MarkWest Energy Partners LP have formed a joint venture under which Enterprise will assign 45% ownership in...

    Long-life basins drive PetroQuest's success

    02/11/2015

    PQ reinvests excess cash-flow from Gulf Coast and GoM in Cotton Valley and Woodford Shale

    More Oil & Gas Financial Articles

    PAA and Delek Logistics form JV to build Caddo Pipeline

    Tue, Mar 24, 2015

    Plains All American Pipeline LP and Delek Logistics Partners LP have formed Caddo Pipeline LLC, a 50/50 joint venture, to develop the Caddo Pipeline, an 80-mile, 12-inch pipeline between Longview, Texas, and Shreveport, Louisiana.

    WGL Midstream acquires interest in Mountain Valley Pipeline JV

    Thu, Mar 12, 2015

    Mountain Valley Pipeline LLC, a joint venture between affiliates of EQT Corp. and NextEra Energy Inc., says that a subsidiary of WGL Holdings Inc., WGL Midstream, has acquired a 7% ownership interest in the joint venture, and that a subsidiary of Vega Energy Partners Ltd., Vega Midstream MVP LLC, has acquired a 3% interest.

    Total to be operator of PNG’s PRL 15 JV

    Mon, Mar 2, 2015

    InterOil Corp. says that all participants in the Petroleum Retention License (PRL) 15 joint venture have unanimously voted to appoint Total E&P PNG Ltd. as operator of the PRL 15 JV. PRL 15 is located in the Gulf Province of Papua New Guinea.

    Bounty ends deal to buy stakes in Empire's Carnarvon Basin permits

    Fri, Feb 27, 2015

    Bounty Oil & Gas NL said on Feb. 27 that the indicative agreement with Empire Oil & Gas NL for Bounty to buy all of Empire’s Carnarvon Basin permit interests in Western Australia held by Empire subsidiary has been terminated by mutual concern. Bounty has been a long-term joint venture partner with Empire in a number of the permits.

    JV formed for Panola NGL Pipeline expansion project

    Wed, Feb 25, 2015

    Enterprise Products Partners LP, Anadarko Petroleum Corp., DCP Midstream Partners LP, and MarkWest Energy Partners LP have formed a joint venture under which Enterprise will assign 45% ownership interest in its wholly owned Panola Pipeline Co. LLC.

    OGFJ photo of the day


    Click to view slideshow

    Oil & Gas Jobs

    Search More Job Listings >>
    Subscribe to OGFJ