Oxy closing in on Anadarko deal
$38 billion acquisition expected to be approved by shareholders
The Houston oil company Occidental Petroleum plans to close its $38 billion acquisition of Anadarko Petroleum next week.
The Woodlands-based Anadarko on Thursday will tally the votes of its shareholders, who are expected to approve the sale to Occidental by a wide margin. Occidental CEO Vicki Hollub said her company plans to “promptly” close the deal later that same day.
The quick timeline would ensure that the proxy fight launched by famed corporate activist Carl Icahn won’t have any effect on the deal being consummated. Icahn, who owns a significant stake in Occidental, is seeking to replace nearly half of Oxy’s board of directors.
Icahn has contended Oxy overpaid for Anadarko and went against the wishes of its shareholders by winning a bidding war over the much larger Chevron. If Icahn’s bid proves successful, he could play a role in selling the expanded Oxy for parts further down the road
This week, Occidental reported its second quarter profit fell 25 percent from the year prior to $635 million, in part due to merger expenses. The company’s revenues in the quarter jumped 8 percent to $4.5 billion from $4.1 billion a year ago.
Oxy also said it formed a new Permian Basin joint venture with Colombia’s state-owned oil company Ecopetrol to develop nearly 100,000 net acres in the Permian’s eastern section, called the Midland Basin. To help Colombia develop expertise in shale oil development, Ecopetrol will pay Oxy $750 million up front and carry another $750 million in capital into the partnership. Oxy will operate the joint venture and own 51 percent of it.
“As we move toward closing the acquisition of Anadarko and combining our two companies into an
innovative and sustainable energy leader, we remain well positioned to drive profitable growth and return excess cash to our shareholders,” Hollub said. “Our strategic partnership with Ecopetrol is a further example of our commitment to enhancing our value proposition.”
The Ecopetrol partnership represents another deal that can help Oxy pay down the debt from the Anadarko acquisition. Oxy also is planning to sell Anadarko’s Africa assets to the French energy major Total for $8.8 billion.
The Anadarko deal, including its prized acreage in the Permian’s western section, called the Delaware Basin, is expected to secure Oxy as the Permian’s leading oil and gas producer. The Permian, which straddles West Texas and New Mexico, is the nation’s most productive oil field.
Oxy’s oil and gas production in the second quarter exceeded projections, rising tot 741,000 barrels of oil equivalent a day from 719,000 barrels a day in the first quarter of 2019.