Occidental Petroleum Cancels Sale Of Algerian Assets

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Vicki Hollub, CEO of Occidental Petroleum Corporation

Occidental Petroleum Corp. has halted a year-long effort to sell Algerian oil and gas fields to raise cash for debt payments, saying it now regards them as “core” assets.

Occidental had agreed to sell the Algerian holdings, along with a smaller position in Ghana, for around $4.9 billion to Total SE but the French major walked away from the deal in May after the North African country blocked the sale.

The Houston-based oil explorer will instead look to offload other assets to cover more than $6 billion of debt due next year, Chief Executive Officer Vicki Hollub said during a conference call with analysts on Tuesday, according to Bloomberg.

The announcement came a day after Occidental disclosed a $6.6 billion writedown triggered by the second-quarter collapse in crude prices.

The decision by Algeria to block the Total deal was a major blow to Hollub’s plan to use the proceeds to shrink debt accumulated in the $37 billion takeover of Anadarko Petroleum Corp. last year.

The pandemic-driven plunge in oil demand put further stress on Occidental’s balance sheet, prompting Hollub to slash dividends to a multi-decade low in May.

Since March, bonds from oil and gas producers such as Occidental Petroleum, Continental Resources, PDC Energy, WPX Energy and Murphy Oil have returned more than 75%, pushing yields in most cases back below 7%.

“It’s not that we gave up on selling Algeria,” Bloomberg quoted Hollub as saying during the call, adding that: “We believe that those assets there are such high quality, they’re going to be very competitive with our domestic assets. We want to be in Algeria.”

Occidental fell 2.6% to $16.06 at 12:53 p.m. in New York and was the day’s worst performer in the S&P 500 Energy Index. The share have fallen 61% this year.

Hollub said she’s confident the company can raise $2 billion by auctioning off other assets in the near term to help pay down debt.

Occidental is down to a final bidder for land and mineral rights in Wyoming, from 13 interested parties at the outset, Hollub said.

The company is conducting due diligence on the buyer and expects to complete the sale by the fourth quarter, she said, without giving a valuation.

The state of Wyoming had expressed interested in buying the rights.

Occidental is also considering selling assets in the Middle East and Africa for around $4.5 billion to Indonesia’s state-owned PT Pertamina, people with knowledge of the matter said last month.

Source: www.energynewsafrica.com

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