Occidental Petroleum gets green light to sell Permian assets to Colombian energy company
A Columbian energy company was approved by the U.S. federal government to form a joint venture with one of the Permian Basin’s top oil and gas producers.
Ecopetrol announced regulatory approvals were received on Tuesday for the deal with Occidental Petroleum to develop land in the Permian for oil and gas production.
The transaction was expected to close by the end of 2019.
The deal was announced in July and would see Ecopetrol develop 97,000 acres of Occidental’s Midland Basin properties on the Texas side of the basin which stretches across West Texas and southeast New Mexico.
The agreement allowed Ecotpetrol to book about 160 million barrels of oil equivalent of proven but undeveloped oil and gas reserves, and access to “one of the most prolific resource plays in the world,” read and Ecopetrol news release.
The company will pay Occidental $750 million in cash and another $750 million in carried capital for a 49 percent stake in the venture, while Occidental will own a 51 percent interest.
“This will enable Ecopetrol to advance its expertise in shale development and ensure technology and knowledge transfer from the Permian Basin to its assets in Colombia,” read a statement from Ecopetrol.
“The deal is fully aligned with Ecopetrol’s strategic priorities outlined in the 2019-2021 business plan, which focus on reserves and production growth, under a strict capital deployment discipline.”
Ecopetrol President Felipe Bayon said the move would help the company develop expertise in shale development and technologies which it could then bring back to Columbia.
It would also assist Occidental in increasing its Permian Basin production, while oil and gas continued to boom in the region.
“We are excited to partner with one of the largest operators in the Permian Basin, especially one we have worked successfully with for so many decades,” Bayon said.
“This is a key step to enhance our reserve base and production growth whilst we strengthen our capabilities in shale development and bring this technology to Colombia for the economic benefit of the country.”
The news of the deal came just months after Occidental completed its acquisition of major oil and gas producer in the Permian, following a bidding war with global oil and gas giant Chevron.
Occidental closed on the deal to purchase Anadarko Petroleum on Aug. 8, with the transaction valued at $55 billion including Anadarko’s debt.
Occidental Chief Executive Officer Vicki Hollub said the company was working to solidify its presence in the booming Permian Basin and its focus on developing oil and gas throughout the prolific region.
Following the deal, the company was valued at $100 billion globally with assets totaling 1.4 million barrels of oil equivalent per day.
“Occidental is a leader in using technological innovation to create value, and we will deploy our expertise to enhance the performance and productivity of Anadarko’s assets not only in the Permian, but globally,” she said.
“Occidental and Anadarko have a highly complementary asset portfolio, providing us with a unique opportunity to realize significant operating, cost, and capital allocation synergies and achieve near-term cash flow accretion.”
