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Occidental Petroleum extends, expands Permian Basin joint venture through 2025

Three years after completing its Permian joint venture with Colombia’s Ecopetrol, Occidental Petroleum announces its extension and expansion.

In an earnings call discussing second quarter earnings on Aug. 3, Occidental President and Chief Executive Officer Vicki Hollub told investors the joint venture in the Midland Basin is not only being enhanced but being expanded to cover approximately 20,000 acres in the Delaware Basin. That includes 17,000 acres in the Texas portion of the Delaware that will utilize Western Midstream’s takeaway infrastructure.

The joint venture with Ecopetrol announced in 2019 encompasses about 100,000 acres to be developed in Occidental’s holdings across Andrews, Ector, Glasscock, Howard, Martin, Midland, Reagan and Upton counties. That acreage included 4,700 gross locations with rights to multiple benches, including the  middle and lower Spraberry and the Wolfcamp A, B and C. Ecopetrol paid $750 million in cash at closing of the agreement and $750 million in capital during the joint development period – for a total of $1.5 billion.

The extension of the Midland Basin joint venture allows Occidental to continue capital carry through the end of the first quarter of 2025. With the expansion in the Delaware Basin, Occidental benefits from an additional capital carry of up to 75%, and Ecopetrol will earn a percentage of the working interest.

“When we announced our Midland Basin joint venture with EcoPetrol in 2019, I mentioned how excited we were to be working with one of our strongest and longest-standing strategic partners,” Hollub said during the earnings call. “The  joint venture has worked exceptionally well for both partners, with Oxy benefiting from incremental production and cash flow from the Midland Basin with minimal investment. We are fortunate to collaborate with a partner who has extensive expertise and with whom we share a long-term vision.”

Read More: Occidental Petroleum extends, expands Permian Basin joint venture through 2025

2022-08-27 23:18:20

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