Ecopetrol declined to acquire a 30% stake in CrownRock LP’s Midland Basin assets, Occidental said in a regulatory filing. (Source: Shutterstock)
Ecopetrol declined to acquire interests in CrownRock LP’s assets following discussions with Permian Basin joint venture partner Occidental Petroleum, according to an Aug. 1 Securities and Exchange Commission (SEC) filing.
Occidental and Colombian oil company Ecopetrol had previously been engaged in talks regarding a potential purchase of 30% of CrownRock’s assets.
Occidental is acquiring Midland Basin E&P CrownRock in a $12 billion transaction announced in December.
The discussions stemmed from the 2019 formation of a Permian joint venture (JV) between Occidental and Ecopetrol, which is focused on developing Midland Basin oil and gas properties.
The JV’s structure gave Ecopetrol the right to participate in interests acquired by Occidental and its affiliates in areas of mutual interest, according to regulatory filings.
If Ecopetrol were to move forward with a deal, Occidental had expected the company to pay around $3.6 billion for a 30% stake in CrownRock’s assets.
Occidental’s SEC filing in late July noted that should the companies be unable to reach an agreement by August, Colombia's Ecopetrol can elect for the JV company—Rodeo Midland Basin Joint Venture—to acquire the CrownRock assets.
Under that scenario, a transaction would result in an indirect ownership by Ecopetrol of an undivided 49% interest in the CrownRock assets.
“This option expires in August 2024, and there is no assurance that Ecopetrol can or would exercise such an option,” Occidental said.
The CrownRock deal will deliver to Occidental 1,700 undeveloped locations across the core of the Permian’s Midland Basin. Most of those undrilled locations are expected to breakeven with oil prices ranging between $40/bbl and $60/bbl.
Occidental expects to add approximately 170,000 boe/d through the CrownRock acquisition.
On July 29, Occidental announced selling a portion of its Delaware Basin assets to Permian Resources for $817.5 million in proceeds to reduce debt.
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