US oil company Occidental has reached an agreement to sell some of its Delaware Basin assets in Texas and New Mexico to Permian Resources for approximately $818m.
This sale is part of a broader divestiture strategy, with the company expecting to raise a total of $970m from asset disposals this year.
Occidental plans to use the proceeds to reduce debt, which stood at more than $18bn at the end of Q1.
The company had earlier revealed a plan to divest $4.5bn–$6bn in assets within 18 months following the completion of its acquisition of CrownRock, expected to happen in August.
The assets being sold to Permian Resources include around 27,500 net acres in Texas and 2,000 net acres in New Mexico, with a combined production estimate of 15,000 barrels of oil equivalent per day (boepd) for Q4 2024.
The infrastructure associated with these assets encompasses more than 100 miles of operated oil and gas gathering systems, over 10,000 surface acres and various water infrastructure components.
Occidental president and CEO Vicki Hollub said: “We are pleased with the significant progress to date on our divestiture programme, which is aimed at derisking the financing of the CrownRock acquisition and accelerating our shareholder return pathway.”
Permian Resources co-CEO James Walter said: “Our overarching goal is to drive value for our investors, and this acquisition of high-quality assets adjacent to our existing position is a perfect example.
“Consistent with our strategy of pursuing sound M&A opportunities, this bolt-on acquisition adds core inventory, which immediately competes for capital and is accretive to key metrics over both the short and long-term. Furthermore, the substantial midstream infrastructure and surface acres represent material value and will provide us with significant flexibility going forward.”
Subject to customary closing conditions, the transaction is expected to close in Q3 2024.
Earlier in the month, Occidental also revealed negotiations with Ecopetrol of Colombia for a 30% stake in CrownRock, potentially worth $3.6bn.
The acquisition of CrownRock, valued at $12bn, is set to enhance Occidental’s asset base with approximately 1,700 undeveloped locations and an additional 170,000boepd of production in 2024.
CrownRock’s assets, situated in the Midland Basin, are adjacent to Occidental’s current operations, providing strategic value to the company.
