Occidental Petroleum President and CEO Vicki Hollub took the microphone Aug. 8, telling M&A dealmakers, buyers and investors “some think that this is a fire sale and it is not.”

Hollub was responding during Oxy’s earnings call to queries this past week on Oxy’s Plan B for raising an additional $3.5 billion in asset sales after Colombia’s Ecopetrol declined picking up a 30% stake for $3.6 billion in Oxy’s newly acquired CrownRock LP portfolio.

Oxy told investors in December and credit-rating firms this summer that it planned to reduce debt by $4.5 billion to $6 billion within 18 months of the $12 billion CrownRock close on Aug. 1.

Specifically, investors and the ratings firms were expecting Ecopetrol to show up for 30%.

Oxy is looking currently at property it might put on the market toward the balance due in its debt-reduction commitment.

Sunil Mathew, CFO, said on the call that the debt reduction goal is actually 70% met already, due to prepayment of some borrowing, $970 million in other asset sales and other instruments.

As for divestments, Hollub said, “we feel like, [if] talking in detail about what the assets would be, I would compromise our ability to maximize the value of those divestitures. We've said previously that we get a lot of incoming offers.”

Meanwhile, “I can just assure you that we have high confidence that we're going to be able to achieve our debt-reduction targets,” she said.

The potential list can’t be revealed yet “because we really haven't made decisions on what the next set of divestitures would be. We're still under evaluation of that."

But Hollub gave a shout-out to Oxy’s “onshore portfolio” specifically, saying “we welcome the opportunity to monetize some of these assets at an attractive price.”

‘Anti-U.S.’

As for the failed deal with Ecopetrol, Hollub said in the call, “We worked on that deal from March to just last week and we thought we were done.”

“But President [Gustavo] Petro of Colombia didn't approve of it and he's made it very clear to the world that he's anti-oil and gas, anti-fracking and anti-U.S.,” Hollub said.

“And with those three strikes [against Oxy], he pretty much dealt Ecopetrol out of the deal. And that's all according to news reports.”

Colombia’s government owns 85.5% of Ecopetrol.

She added that “unfortunately, there are others in the world like Petro and there are some actually in the United States like Petro who believe that oil and gas should go away and believe that we shouldn't be an industry anymore,” she said. “But the reality is that, as you know, oil and gas is going to be needed for many decades to come.”

Oxy does have a large CO2 sequestration unit in development that was of interest to Ecopetrol, Hollub said, “and wanted to be a part of it.” But a deal for a CrownRock stake did not happen.

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Why sell a piece of CrownRock?

A securities analyst asked why, if the CrownRock property is as good as Oxy has described, the first asset Oxy would look to divest would be a piece of its new prize?

Hollub explained that a legacy joint venture (JV) Oxy has with Ecopetrol in the Midland Basin requires each to offer the other 49% of anything it acquires in the Midland Basin in a certain area of mutual interest.

Hollub said Oxy didn’t actually want to part with any of CrownRock. “Certainly we wanted it all; they wanted a part of it.”

Meanwhile, the CrownRock property “is one of the best we've seen.” The well inventory is graded Tier 1 by Oxy and, generally, by industry.

Oxy wanted to buy 100% and told Ecopetrol this, but was obligated to offer a portion to Ecopetrol.

Another analyst asked if Oxy would buy Ecopetrol out of the JV, then.

Hollub said a break-up would simply result in Oxy being 51% operator of the mutual property; Ecopetrol, 49%.

Oxy’s net production in the JV, established in 2019, is approximately 40,000 boe/d.