Occidental Petroleum plans to sell its Wyoming land grant assets to Orion Mine Finance for around $1.3 billion, a boon for the debt-addled Houston independent.
The sale includes about 4.5 million acres of mineral acres underground and 1 million surface acres in Wyoming, Colorado, and Utah. Oxy will continue to derive revenue from existing oil and gas properties on the land, which is primarily cost-free royalties. The deal is expected to close in the fourth quarter.
“This transaction significantly advances the progress against our $2 billion-plus divestiture target for 2020,” Oxy CEO Vicki Hollub said in a statement Wednesday. “We will retain our core oil and gas assets in the Rockies, including the prolific DJ Basin in Colorado and the highly prospective Powder River Basin in Wyoming.”
The deal is the first significant asset sale for Oxy since oil markets crashed as a price war broke out between Saudi Arabia and Russia and the coronavirus pandemic slashed demand for crude. Oxy, saddled with debt from its $38 billion acquisition of rival Anadarko Petroleum last year, is looking to sell billions of dollars of assets to pay its debt, but the oil bust has made it increasingly difficult to sell assets in a down market.
OXY WOES: Oxy loses $8.4 billion in second quarter battered by coronavirus
Oxy suffered a major setback in May when French oil major Total backed out of its deal to purchase the company’s offshore Ghana assets because of low oil prices caused by the pandemic. The company also was unable to sell its Algerian assets and has taken them off the market.
Hollub earlier had warned that Oxy might not be able to sell its assets quickly enough to repay its debt, but has since struck a more optimistic tone as crude prices climbed back above $40 a barrel. Oxy has set a goal to sell $2 billion worth of assets this year and another $2 billion to $3 billion of assets by the middle of next year.
Oxy, which posted a steep second-quarter loss of $8.4 billion during the second quarter, sold 190,000 acres in Uinta Basin’s Greater Natural Buttes gas field in Utah for $87 million. The company is also reportedly in talks with Indonesia’s state oil company Pertamina to sell $4.5 billion of assets in Africa and the Middle East, according to Bloomberg.