Oxy unloads $1.3B worth of assets
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 are 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 bil
lion 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 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 secondquarter 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.
Orion Resources Partners, a global investment firm with about $6.2 billion under management that specializes in precious metals, was interested in buying
Oxy’s mineral rights to the world’s largest known trona deposit. Trona is a mineral used to make soda ash, the principal ingredient in baking soda, glass manufacturing, pollution control systems as well as other chemicals.
“Acquiring high-quality producing royalties is a core component of our investment strategy and we are thrilled to be partnering with Occidental in this transaction,” Oskar Lewnowski, Orion’s chief investment officer, said in a statement. “This transaction offers significant royalty cash flow from the trona mines and has strong potential for mineral development.”
Once the sale closes, the land grants will be held under Sweetwater Royalties, a new base metals and industrial minerals royalty company managed by Orion.