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Occidental Mulls $20B Asset Sale

Occidental Petroleum is considering a sale of its $20 billion natural gas pipeline operator Western Midstream Partners, anonymous sources told Reuters on Tuesday.

The move would ease Occidental’s substantial debt burden, which has reached $19 billion as of December 31, in part due to its costly acquisition of Anadarko. Occidental also has agreed to purchase CrownRock for $12 billion, although the FTC has recently delayed the approval of that acquisition.

Currently, Occidental owns 49% of Western Midstream, a master limited partnership. It also owns its general partner, and as such, it controls Western Midstream’s operations.

According to Reuters, interested parties in Western Mistream could include Enterprise Products Partners and Kinder Morgan.

Occidental has come under fire for its ambitious acquisitions—including the Anadarko acquisition, which Carl Icahn said was one of the worst deals he’s ever seen, calling it hugely overpriced. But Occidental is banking on there being a supply deficit in the near future, predicted recently that there will be an oil supply shortage in the markets by as soon as next year due to a failure to replace crude reserves at a fast enough pace. % after the announcement of the deal

Under Occidental’s oversight, Western Midstream Partners LP completed an acquisition of its own last year, of Meritage Midstream Services II LLC for $885 million—a deal that increased its presence in the Powder River Basin. That deal brought Western Midstream’s natural gas processing capacity toMMcfpd. To pay for the deal, Western Midstream offered 6.35% senior notes with a total principal amount of $600 million.

Occidental Stock was trading down 1.87% On Tuesday afternoon, while Western Midstream Partners LP was trading up 5.56% by 3:10 pm ET, reaching a high last seen in June 2019.

By Julianne Geiger for Oilprice.com

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