Occidental Petroleum Nears $1 Billion Sale of Texas Assets to Permian Resources

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U.S. oil producer Occidental Petroleum is close to finalizing a deal to sell its assets in the Barilla Draw region of Texas to Permian Resources for approximately $1 billion. Sources familiar with the matter disclosed this information to Reuters on Thursday.

The negotiations between the two companies are in the final stages, and an announcement could be made in the coming weeks if discussions proceed smoothly. However, the sources cautioned that there is no guarantee of a deal, as a rival bidder for the Permian Basin assets could still emerge.

Due to the confidential nature of the talks, the sources requested anonymity. Both Occidental and Permian Resources did not immediately respond to requests for comments.

Back in May, Reuters reported that Occidental was considering the sale of these assets as part of a broader strategy to reduce its debt. Backed by Warren Buffett’s Berkshire Hathaway, Occidental’s debt stood at over $18 billion at the end of the first quarter. The company is planning to take on additional debt to fund its $12 billion acquisition of rival CrownRock and has stated its intention to sell up to $6 billion worth of assets within 18 months of closing the CrownRock deal.

The sale of the Barilla Draw assets is expected to boost Permian Resources’ production by approximately 24,000 barrels of oil equivalent per day. Additionally, it would expand Permian Resources’ footprint in the Permian Basin, the largest shale oil belt in the world, by about 27,500 net acres.

High oil prices have spurred a wave of deal-making in the U.S. shale sector over the past two years, as companies seek producing wells to ensure future supplies following Russia’s invasion of Ukraine. As a result, several large-cap oil producers who have been active in acquisitions are now expected to divest billions of dollars of non-core assets.

Permian Resources, which was formed from the merger of Colgate Energy and Centennial Resources in 2022, has been actively acquiring assets in the Permian region. Acquiring the Barilla Draw assets would be its largest deal since securing a $4.5 billion agreement to acquire Earthstone Energy last year.

Permian Resources is set to report its second-quarter earnings on August 6, while Occidental will announce its results on August 8.