Oxy buys Permian enhanced oil recovery assets for $600M

By Luke Geiver | June 20, 2017

Occidental Petroleum is increasing its stake and responsibilities related to an enhanced oil recovery property in Texas. Through a deal with Hess Corp., Oxy will become the main operator of the CO2 EOR property located in the Permian. The property includes assets in the Seminole-San Andres unit, along with other field assets in New Mexico and a CO2 pipeline. In total, the transaction with Hess will cost roughly $600 million.

Hess said it will use the proceeds from the sale to fund other growth initiatives. Oxy said the EOR operation is now the largest domestic oil producing asset of its kind owned by the E&P.

In addition to the EOR buy, Oxy also shifted some acreage. The company sold off 13,000 of non-strategic acreage in Andrews, Martin and Pecos Counties.

Vicki Hollub, president and CEO of Oxy, said the transactions support the company’s pathway to breakeven at $50 oil after dividend and production growth. “The combined results accelerate cash flow and enhance our future returns by exchanging low-priority development acreage for low decline, low capital intensity EOR production that has significant opportunity for value improvement,” Hollub said.

The transactions are expected to close by the third quarter.

Earlier this spring, Oxy took place in an oil tanker ship docking and loading exercise at the Port of Corpus Christi. The exercise was performed to test the possibility of loading and shipping shale-based crude oil from the Port to markets in Asia and Europe.