Like they say, there’s more than one way to skin a cat—especially when you’re hellbent for leather to reduce a mountain of debt. Such is the case for Houston-based Occidental Petroleum, which is wasting no time to meet its targeted debt reduction of $15 billion by mid-2020. Following last year’s leviathan acquisition of Anadarko Petroleum, Oxy began shedding non-core assets outside of the Permian Basin amid a cacophony of criticism following the $55 billion at closing purchase. Among those assets, Anadarko’s Mozambique LNG development project and other African assets for $8.8 billion and the proposed sale of Oxy’s legacy gas field properties in the Uinta Basin.
Occidental Petroleum Corporation is an American company engaged in hydrocarbon exploration in the United States, the Middle East, and Colombia as well as petrochemical manufacturing in the United States, Canada, and Chile. It is organized in Delaware and headquartered in Houston.
Make no doubt, the struggle has been real for Oxy to reduce its leverage. As part of the Anadarko transaction, Oxy inherited Western Midstream Partners, which operates natural gas, crude oil, and produced water gathering pipelines and gas plants in the Rockies, Pa., and Texas. After much speculation as to whether the company would sell its majority stake in Western, Occidental sought bids for a minority interest in the hope of retaining control while taking $7.5 billion in debt off its books. The timing, however, could not have been worse. Pipeline stocks in July declined and Western’s market value fell nearly 18%. Offers came in disappointingly low. By October, Occidental put its Western plans on ice.
But now, in the first full week of a new decade, Oxy is rocking a new plan for Western Midstream that may very well satisfy its goal to reduce debt while further monetizing its pipeline business. RMR today is following the latest news from Occidental, which just announced it will spin off Western Midstream and reduce its ownership stake below 50% during the year. With new service, operating and governance agreements in place, the company projects 2020 EBITDA between $1.875 billion and $1.975 billion. Management and Western-dedicated employees will transition to the now independent midstream company as it continues to pursue more third-party growth opportunities, including its customer Occidental.
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