Occidental Petroleum, an American company engaged in the energy sector, is investigating the sale of Western Midstream Partners, a natural gas pipeline operator valued at close to $20 billion, including debt.
The potential divestment focuses on alleviating Occidental’s debt burden, which has gathered due to recent acquisitions, including the $12 billion purchase of CrownRock in December.
According to the media sources, Occidental’s move to sell Western Midstream is part of a strategy to smoothen its operations and reduce its debt load.
Occidental’s acquisition spree, which includes the $54 billion takeover of Anadarko Petroleum four years ago, has increased its debt, pushing the requirement for asset sales to restore financial stability.
Commenting on Occidental’s debt reduction strategy, A spokesperson for the company highlighted the significance of divesting non-core assets to achieve its goal of reducing debt to below $15 billion.
The completion of the CrownRock deal is important for Occidental’s plans, which might influence its decision regarding the sale of Western Midstream.
Western Midstream’s potential sale has activated investor interest, with shares of the pipeline operator spilling by 5.7 % on the news.
However, Occidental’s stock experienced a decline amid broader downturns among energy producers.
JPMorgan Chase is advising Occidental on the sale of Western Midstream, aiming to increase the value of the company’s ownership stake.
The divestment is anticipated to attract interest from industry players, including Enterprise Products Partners, Williams Companies, and Kinder Morgan, as well as private equity firms and infrastructure funds.
Western Midstream, which operates 16,000 miles of pipelines in key oil and gas-producing regions like the Permian basin and the Denver-Julesburg basin, is seen as an asset in the current market environment.
No deal is guaranteed and Occidental and its advisors are proceeding.
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