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Occidental pushing on with asset sales following Anadarko takeover
US
OCCIDENTAL Petroleum has started taking steps to sell off non-core assets as it seeks to reduce debt after its acquisition of Anadarko Petroleum. The deal, worth $55bn including the assumption of Anadarko’s debt, closed last month, becoming the largest energy transaction in years. Occidental’s debt quadrupled to $40bn as a result of the deal, at a time when investors are demanding fiscal restraint. Now the company is seeking to offload assets in a bid to shore up its balance sheet.
Last week, Occidental said it would sell off its stake in Plains All American Pipeline. The company is putting its stake in Plains and general partner Plains GP Holding up for sale through two public offerings. It anticipates receiving gross proceeds of $321.4mn and $330.8mn respectively from the Plains All American and Plains GP offerings, or a com- bined $652.2mn.
Occidental had already agreed to sell Ana- darko’s African assets to France’s Total for $8.8bn prior to the closing of its takeover. The assets in question include the Mozambique LNG project, on which Anadarko took a final investment deci- sion (FID) in June.
The sale of the assets to Total is anticipated to close in 2020. It will account for a significant pro- portion of the $10-15bn of assets that Occidental is seeking to sell.
The company is considering selling at least a stake in Anadarko’s pipeline spinoff firm, West- ern Midstream Partners. Occidental’s stake in Western Midstream is estimated to be worth around $7bn.
Also last week, Bloomberg cited sources
familiar with the matter as saying Blackstone Group and Apollo Global Management were interested in bidding for a majority stake in Western Midstream. The sources added that Global Infrastructure Partners and KKR & Co. were also interested in buying into Western Midstream. In Apollo’s case, the company is reportedly considering investing in the pipeline operator through Spartan Energy Acquisition, a special purpose acquisition vehicle (SPAC) that it backs.
According to the sources, a deal could be finalised by the end of the year, but Occidental may also opt to retain full ownership in Western Midstream.
Western Midstream owns over 15,200 miles (24,462 km) of oil and gas pipelines and 73 processing and treatment facilities in the US Midwest and Texas, according to an investor presentation from May.
There is also speculation among energy ana- lysts that Occidental may consider selling assets in the deepwater Gulf of Mexico or in Colorado’s Denver-Julesburg (DJ) Basin, where Anadarko was the leading producer.
Meanwhile, the company is doubling down on the Permian Basin. In August, Occidental formed a joint venture with Colombia’s state- owned Ecopetrol to develop nearly 100,000 net acres (405 square km) in the Permian’s Mid- land sub-basin. Under the deal, Ecopetrol will pay Occidental $750mn up front and will carry another $750mn in capital into the partnership. Occidental has said it is planning to use the first portion of cash it will receive from Ecopetrol to pay down debt.™
Occidental has said it will sell off its stake in Plains All American Pipeline.
The company is considering selling at least a stake in Anadarko’s pipeline spinoff firm, Western Midstream Partners.
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