HOUSTON--(BUSINESS WIRE)--Occidental Petroleum Corporation (NYSE:OXY) announced today that it has agreed to a number of purchase and sale transactions in the Permian Basin. On a combined basis, these transactions require no net cash outlay and add approximately 3,500 barrels of oil equivalent per day to the Company’s production. Occidental will reduce its Permian Resources position by 13,000 net acres, divesting non-strategic acreage in Andrews, Martin and Pecos Counties and adding incremental acreage to enhance a future core development area in Glasscock County. Occidental also agreed to increase its ownership interests and assume operatorship of a CO2 enhanced oil recovery (EOR) property.
“These transactions support our pathway to breakeven at $50 after dividend and production growth and our long-term, returns-focused value proposition. The combined results accelerate cash flow and enhance our future returns by exchanging low-priority development acreage for low decline, low capital intensity EOR production that has significant opportunity for value improvement,” said Vicki Hollub, President and Chief Executive Officer. “By monetizing assets in the tail of the portfolio that were not strategic to us, but are synergistic to other companies, we are creating value for our shareholders.”
The net Permian Resources transactions will generate proceeds of approximately $0.6 billion. The divested acres had no significant near-term development plans while the acquired acreage provides additional value within the future development area. The Permian EOR transaction included the acquisition of working interests in the Seminole-San Andres Unit, a premier CO2 flood, interests in the Seminole Gas Processing Plant, source fields at Bravo Dome Unit and West Bravo Dome Unit and the Sheep Mountain and Rosebud CO2 pipelines for $0.6 billion. Occidental has had an ownership interest in these EOR assets since 2000. Seminole-San Andres Unit will become Occidental’s largest domestic oil producing EOR unit.
All the transactions are expected to close by the third quarter. An updated investor presentation, which includes additional details is available at: http://www.oxy.com/investors/Earnings/Pages/Investor-Presentations.aspx.
About Occidental Petroleum
Occidental Petroleum Corporation is an international oil and gas exploration and production company with operations in the United States, Middle East and Latin America. Headquartered in Houston, Occidental is one of the largest U.S. oil and gas companies, based on equity market capitalization. Occidental’s midstream and marketing segment gathers, processes, transports, stores, purchases and markets hydrocarbons and other commodities. The company’s wholly owned subsidiary OxyChem manufactures and markets basic chemicals and vinyls. Occidental posts or provides links to important information on its website at www.oxy.com.
Portions of this press release contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects. Actual results may differ from anticipated results, sometimes materially, and reported results should not be considered an indication of future performance. Factors that could cause results to differ include, but are not limited to: global commodity pricing fluctuations; supply and demand considerations for Occidental’s products; higher-than-expected costs; the regulatory approval environment; not successfully completing, or any material delay of, field developments, expansion projects, capital expenditures, efficiency projects, acquisitions or dispositions; uncertainties about the estimated quantities of oil and natural gas reserves; lower-than-expected production from development projects or acquisitions; exploration risks; general economic slowdowns domestically or internationally; political conditions and events; liability under environmental regulations including remedial actions; litigation; disruption or interruption of production or manufacturing or facility damage due to accidents, chemical releases, labor unrest, weather, natural disasters, cyber-attacks or insurgent activity; failure of risk management; changes in law or regulations; reorganization or restructuring of Occidental’s operations; or changes in tax rates. Words such as “estimate,” “project,” “predict,” “will,” “would,” “should,” “could,” “may,” “might,” “anticipate,” “plan,” “intend,” “believe,” “expect,” “aim,” “goal,” “target,” “objective,” “likely” or similar expressions that convey the prospective nature of events or outcomes generally indicate forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this release. Unless legally required, Occidental does not undertake any obligation to update any forward-looking statements, as a result of new information, future events or otherwise. Material risks that may affect Occidental’s results of operations and financial position appear in Part I, Item 1A “Risk Factors” of the 2016 Form 10-K.