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.
Recommended Reading
Dividends Declared (Sept. 30 - Oct. 11, 2024)
2024-10-11 - Here is a compilation of dividends and distributions declared from select upstream, midstream and service and supply companies from Sept. 30 to Oct. 11.
Post Oak Backs New Permian Team, But PE Faces Uphill Fundraising Battle
2024-10-11 - As private equity begins the process of recycling inventory, likely to be divested from large-scale mergers, executives acknowledged that raising funds has become increasingly difficult.
Delek Logistics Partners Raises $166MM in Offering to Pay Debt
2024-10-11 - Delek Logisitics Partners closed an offering of 4.42 million common units to generate gross proceeds of $166 million.
Citgo Auction in Jeopardy as Venezuela Bondholders Pursue Parallel Claims
2024-10-11 - The court cases have increased uncertainty over which company is best positioned to take over the seventh-largest U.S. refiner Citgo Petroleum.
Quantum’s VanLoh: New ‘Wave’ of Private Equity Investment Unlikely
2024-10-10 - Private equity titan Wil VanLoh, founder of Quantum Capital Group, shares his perspective on the dearth of oil and gas exploration, family office and private equity funding limitations and where M&A is headed next.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.