Occidental Petroleum is exploring a sale of a part of its operations in the Permian Basin that could fetch more than $1 billion for the energy producer, according to people familiar with the matter.
The company’s divestment effort is linked to Occidental’s broader plan to slash its debt, which stood at $18.5 billion at the end of 2023, the sources said, requesting anonymity as the discussions are confidential.
Occidental, which is backed by Warren Buffett’s Berkshire Hathaway, is working with a financial adviser on the sale process for the assets in the Barilla Draw region of Texas, which is located within the Delaware portion of the Permian basin, the sources said, cautioning a deal is not guaranteed.
A spokesperson for Occidental declined comment.
In February, Occidental’s long-time Chief Executive Vicki Hollub said the Federal Trade Commission’s (FTC) second request for information on the company’s $12 billion takeover of CrownRock had pushed back the deal’s closing date to the second half of this year, forcing the Houston-based oil producer to postpone planned asset sales worth up to $6 billion.
Occidental plans to take on $9.1 billion of new debt to help fund its deal for CrownRock.
However, Occidental has kicked off the sale process for the Barilla Draw assets, as it sees an opportunity to attract strong interest from other Permian oil producers who have completed their recent dealmaking spree, the sources said.
The assets cover approximately 27,500 net acres and produces around 24,400 barrels of oil equivalent per day, the sources added.
(Reporting by Shariq Khan and David French in New York; Editing by Bill Berkrot)