Occidental Petroleum in advanced talks to sell Barilla Draw assets, sources say

Permian Resources

25/07/2024 19:00

By Shariq Khan
       NEW YORK, July 25 (Reuters) - U.S. oil producer
Occidental Petroleum  OXY.N  is nearing a deal to sell its
assets in the Barilla Draw region of Texas to Permian Resources
 PR.N  for about $1 billion, people familiar with the matter
told Reuters on Thursday.
    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 reply 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 CrownRock deal. 
    A deal for the Barilla Draw assets is expected to boost
Permian Resources' output by about 24,000 barrels of oil
equivalent per day. 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 August 6, while Occidental is scheduled to announce
it results on August 8.

 (Reporting by Shariq Khan in New York; Editing by Laila Kearney
and Nick Zieminski)
 ((Shariq.Khan@thomsonreuters.com; Twitter/X: @shariqrtrs;
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