Executives of Occidental Petroleum Corp., Houston, are negotiating with their peers at Colombia’s Ecopetrol SA about selling a sizable portion of the assets of CrownRock LP, which Occidental is preparing to acquire for about $12 billion.
The talks are taking place under the umbrella of a joint venture Occidental and Ecopetrol set up in 2019 to develop and operate oil and gas assets in the Midland basin. The companies’ agreement gave each the right to invest in assets acquired by the other in “an area of mutual interest” and Ecopetrol told Occidental in late May that it intends to buy 30% of CrownRock.
In a regulatory filing, Occidental executives said they expect a successfully negotiated deal to be worth $3.6 billion. If the transaction is completed, they plan to pay down some of the company’s debts. Occidental finished March with about $18.5 billion of long-term debt on its books, which equated to about 60% of its shareholders’ equity.
Occidental late last year announced its intent to buy CrownRock, which had 2023 revenues of $2.5 billion and is expected to produce about 170,000 boe/d this year from its 94,000 acres in the Permian basin (OGJ Online, Dec. 11, 2023). At the time, president and chief executive officer Vicki Hollub and the executive team also said they planned to divest $4.5-6 billion worth of US assets by mid-2025.
Shares of Occidental (Ticker: OXY) were down nearly 2% to roughly $62 in late-morning trading July 22. Over the past 6 months, shares have risen about 10%, growing the company’s market capitalization to $55 billion.
