U.S. oil producer Occidental Petroleum is nearing a deal to sell its assets in the Barilla Draw region of Texas to Permian Resources for about $1 billion, people familiar with the matter told Reuters on July 25.

The two companies are in the process of finalizing the deal that could be announced in the coming weeks if the talks don't fall apart, the sources said, cautioning that a deal is not guaranteed and that a rival suitor for the Permian Basin assets could emerge.

The sources requested anonymity as the discussions are confidential. Occidental and Permian Resources did not immediately respond to requests for comment.

Reuters reported in May that Occidental was exploring a sale of the assets as part of a broader plan to slash its debt.

Backed by Warren Buffett's Berkshire Hathaway, Occidental's debt stood at over $18 billion at the end of the first quarter. Occidental, which is planning to take on additional debt to fund its $12 billion takeover of rival CrownRock, has said it plans to sell up to $6 billion of assets within 18 months of closing the deal.

A deal for the Barilla Draw assets is expected to boost Permian Resources' output by about 24,000 boe/d. It would also add about 27,500 net acres to the producer's footprint in the Permian Basin, which is the largest shale oil belt in the world.

High oil prices have resulted in a spate of dealmaking in the U.S. shale patch in the last two years, as companies sought producing wells to guarantee future supplies after Russia's invasion of Ukraine.

Several large-cap oil producers that splurged on dealmaking over the past year are now expected to divest billions of dollars of non-core assets.

Permian Resources, formed after Colgate Energy merged with Centennial Resources in 2022, has been an active acquirer in the Permian region. A takeover of the Barilla Draw assets would be its largest since the company clinched a $4.5 billion deal for rival Earthstone Energy last year.

Permian Resources plans to report its second-quarter earnings on Aug. 6, while Occidental is scheduled to announce results on Aug. 8.

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