Occidental Petroleum Corporation signed a definitive purchase and sale agreement with Plains Exploration & Production to purchase the following properties for $1.55 billion.
Occidental will gain 50% of PXP's working interests in oil and gas properties located in the Permian Basin, West Texas and New Mexico. Occidental expects to be named the operator of all the assets currently operated by PXP. Occidental will also acquire 50% of PXP's working interests in oil and gas properties located in the Piceance Basin in Colorado. PXP will remain the operator and Occidental expects the properties to deliver multi-year production growth.
"This acquisition is consistent with our strategy of focusing on our Permian Basin core area and continuing to build a meaningful position in the Piceance Basin," said Dr. Ray R. Irani, Chairman and Chief Executive Officer of Occidental Petroleum Corporation. "Currently, we produce approximately 40 million cubic feet per day of gas in the Piceance Basin; together with our share of the new assets, we will have 67 million cubic feet per day of production. We look forward to 20 percent year-over-year growth from the combined Piceance assets.
"The Permian properties, including the large acreage position, have excellent growth prospects. We believe, over time, the proved reserves from both the properties will more than double."
Current production (net to Occidental) from the properties being acquired is approximately 13,500 barrels of oil equivalent (BOE) per day. The Permian properties produce approximately 9,000 BOE per day. The Permian properties have 46 million (BOE) of proved reserves (net to Occidental). The Piceance properties also have approximately 46 million BOE of proved reserves (net to Occidental).
This transaction is expected to close in the first quarter subject to government approvals.
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