Occidental Petroleum Agrees to $1.33 Billion Sale of Rockies Assets

Occidental Petroleum Corp. agreed to the sale of a chunk of Rockies assets for approximately $1.33 billion, the Houston-based independent E&P said Aug. 19.

Global alternative investment management firm Orion Mine Finance agreed to the acquisition, comprised of Wyoming, Colorado and Utah land grant assets that included approximately 4.5 million mineral acres and 1 million fee surface acres.

As part of the agreement, Occidental will retain all cash flow from currently producing oil and gas properties on the position, which it said are primarily cost-free royalties. Also not included in the sale is approximately 2.5 million mineral acres derived from the land grant in Colorado, including Occidental’s core position in the Denver-Julesburg (D-J) Basin.

“This transaction significantly advances the progress against our $2 billion-plus divestiture target for 2020,” Occidental President and CEO Vicki Hollub said in a statement.

“We will retain our core oil and gas assets in the Rockies, including the prolific D-J Basin in Colorado and the highly prospective Powder River Basin in Wyoming,” Hollub added.

Occidental has been focused on reducing debt through asset sales since last year’s acquisition of Anadarko Petroleum, which included the assumption of almost $40 billion in debt.

In June, Occidental closed the sale of its Greater Natural Buttes asset in Utah. Despite the asset producing about 33,000 boe/d in the second quarter, during an earnings call earlier this month Hollub said the cash flow impact from the sale was immaterial due to low gas prices.

Occidental is also still marketing assets in Ghana. However, the company no longer plans for the divestiture of the Algerian assets it had once hoped to sell to France’s Total SA, with Hollub now describing them as  a “core asset” on the company’s earnings call.

“As we’ve said before, we will balance divestiture timing with value realization, and we’ll not sacrifice value just to close transactions quickly,” Hollub added on the call.

In its sale of land grant assets announced Aug. 19, Orion is acquiring mineral rights to the world’s largest known trona deposit, according to the Occidental press release.

Trona is a mineral used to make soda ash, the principal ingredient in baking soda, global glass manufacturing, pollution control systems, as well as other critical chemical applications. The properties will be held under Sweetwater Royalties, a new base metals and industrial minerals royalty company, managed by Orion.

The transaction is expected to close fourth-quarter 2020. Occidental was advised by RBC Capital Markets, CBRE Group Inc., and Latham & Watkins LLP. Orion was advised by Citi and Shearman & Sterling LLP.