Permian bidding war: Occidental Petroleum sells off Anadarko's African assets - Albuquerque Journal

Permian bidding war: Occidental Petroleum sells off Anadarko’s African assets

A key aspect of Occidental Petroleum’s acquisition of Anadarko continued this week as the oil and gas major continued to solidify its position in the Permian Basin of southeast New Mexico and West Texas.

The $55 billion purchase of Anadarko, a major player in the Permian, was finalized in August after a bidding war erupted between Occidental and global oil and gas giant Chevron Corporation.

Chevron initially offered to buy out Anadarko for $33 billion, valuing the company at $50 billion, but was countered by Occidental’s offer of $57 billion.

Although Chevron was still viewed as the favorite to win the bidding war following Occidental’s counter, Berkshire Hathaway and celebrity billionaire chairman Warren Buffett strengthened Occidental’s position with a $10 billion contribution should the sale to Occidental close.

Occidental also committed to selling Anadarko’s assets in Africa, including a liquefied natural gas (LNG) plant in Mozambique for an additional $8.6 billion to French oil and gas company Total S.A.

In a Monday news release, Occidental announced that transaction was completed, as the company looked to grow its efforts to develop resources in the Permian Basin.

The LNG plant sold to Total for $3.9 billion and the two companies committed to continue to work on closing Anadarko’s remaining African assets and the other $4.7 billion in value.

The remaining assets were in Algeria, Ghana and South Africa, and their closings were part of the agreement signed by the companies in August, read the release.

Furthering its stake in the Permian, Occidental also enacted a joint venture with Columbian oil and gas company Ecopetrol to develop acreage in the Midland Basin, on the Texas side of the Permian.

The deal was for $750 million in cash, and another $750 million in carried capital, read the release, and was expected to close by the end of 2019.

Occidental also completed the $650 million sale of its holdings in Plains All American Pipeline, a partnership between multiple oil and gas companies for transportation, marketing and storage of oil and gas products across the country.

The company plans to continue to work toward its goal of delivering $10 billion to $15 billion in asset sales, the release read.

Chief Executive Officer Vicki Hollub said she expects to realize “the full value” of the Anadarko transaction through the company’s recent efforts.

“We have made progress quickly on our post-acquisition divestiture and deleveraging goals and remain confident in our ability to realize the full value of the Anadarko acquisition for our shareholders,” Hollub said.

“Upon completion of our recent initiatives, we will have reached approximately $10 billion of our targeted divestitures with more to follow.”

U.S. oil prices remain flat, backtrack after Saudi attack

Oil prices continued a downward slump, resting at about $54 per barrels as of Tuesday, down from a spike to more than $62 per barrel in mid-September.

The rapid growth last month from about $54 on Sept. 13 to $62 on Sept. 16 was driven by an attack from Yemeni rebels the U.S. blamed on Iran on Saudi Arabia’s oil refinery, cutting that country’s production in half.

That processing attacked facility in Abqaiq was restored to capacity as of Monday, read a report from ENVERUS – formerly Drillinginfo, but production had not resumed.

A ceasefire between the Saudis and Yemen was announced on Friday, bringing some stability to the Middle East, read the report.

But global market anxiety then shifted to trade tensions between the U.S. and China, and concerns for a global economic slowdown driving down oil prices.

“Detracting further from the withering geopolitical risk premium was Friday’s announcement of a Saudi-Yemeni ceasefire,” the report read. “With geopolitical risk diminishing, the trade war between the US and China has returned to the forefront amid growing concerns about a global economic slowdown.”

The result of the shifting pressures was a neutral to negative direction for the market, read the report, as the price per barrel of West Texas Intermediate was expected to drop to $53 per barrel or even lower.

“Market internals last week reversed the slight positive bias that had developed with the declines throughout the week, and the market now has a neutral to negative bias,” the report read.

“Regardless of the potential for geopolitical issues to provide upward volatility, the market has now defined the near-term area that will find significant selling.”

Adrian Hedden can be reached at 575-628-5516, or @AdrianHedden on Twitter.


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