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Bilateral Chamber Member Oxy Makes Two $600M Deals to Sell, Buy Permian Assets

June 19, 2017 | Houston Business Journal

Houston-based Occidental Petroleum Corp. (NYSE: OXY) has sold acreage in one part of the Permian Basin and is using the proceeds to buy more land in another part.

Oxy sold 13,000 acres that were part of its horizontal drilling business line in Andrews, Martin and Pecos counties for $600 million. The buyer was not disclosed. That provides exactly the capital needed to purchase operational interest in infrastructure and fields associated with enhanced oil recovery operations from New York-based Hess Corp. (NYSE:HES), according to press releases from Oxy and Hess.

The assets Hess is selling represent 8,200 barrels of oil equivalent per day, according to the release. But in total, the net production impact of the transactions on Oxy is a gain of 3,500 barrels per day, according to the Oxy press release. The new assets represent a “significant opportunity for value improvement,” said Oxy’s president and CEO, Vicki Hollub, in the press release.

The Hess deal is expected to close Aug. 1, assuming the regulatory process goes smoothly, Hess said in its release.

“These transactions support our pathway to breakeven at $50 after dividend and production growth and our long-term, returns-focused value proposition,” Hollub said.

Enhanced oil recovery is a technique for producing crude that involves injecting CO2 into a well, which increases the oil coming out and traps the greenhouse gas underground. A dwindling Hilcorp Energy Co. field recently got renewed relevance through enhanced oil recovery using carbon captured at an NRG Energy Inc. (NYSE: NRG) power plant near Houston.

Hollub outlined that pathway earlier this year, indicating that her company would be stepping up the pace of its investments in order to push production up to pre-downturn levels. That growth, she said, will be carried out without sacrificing the level of returns Oxy has managed to capture by carefully curating its assets.

Oxy recently docked a Very Large Crude Carrier, or VLCC tanker, at the Port of Corpus Christi in an historic event and successful test. It also recently hired a new CFO as its old one retired.

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