(Bloomberg) – Occidental Petroleum Corp. abruptly stopped a year-long attempt to sell Algerian oil and gas fields to raise money for debt payments, saying they now consider them “core” assets.
Occidental had agreed to sell Algerian assets, along with a smaller position in Ghana, for about $ 4.9 billion to Total SE, but the French major stepped down from the deal in May after the North African country sales blocked.
The Houston-based oil explorer will instead look to charge other assets to cover more than $ 6 billion in debt next year, Chief Executive Officer Vicki Hollub said during a conference call with analysts on Tuesday. The announcement came a day after Occidental revealed a $ 6.6 billion write-off, triggered by the fall of second quarter in raw prices.
Algeria’s decision to block the Total deal was a major blow to Hollub’s plan to use the proceeds to raise debt in the $ 37 billion takeover of Anadarko Petroleum Corp. last year. The pandemic-driven road in oil demand put further stress on Occidental’s balance sheet, causing Hollub to drop dividends in May to a low multi-decade low.
What Bloomberg Intelligence says
Since March, bonds from oil and gas producers such as Occidental Petroleum, Continental Resources, PDC Energy, WPX Energy and Murphy Oil have returned more than 75%, with yields falling below 7% in most cases.
– Spencer Cutter, BI analyst
Read the report here.
“It’s not that we’d stop selling Algeria,” Hollub said during the call. “We are of the opinion that these assets are of such high quality, they will be very competitive with our household assets. We want to be in Algeria. ”
Occidental fell 2.6% to $ 16.06 at 12:53 in New York and was the worst performing day in the S&P 500 Energy Index. The share has fallen 61% this year.
Hollub said she is confident the company could raise $ 2 billion by auctioning off other assets over the full term to help pay off debt.
Occidental is down to a definitive bidder for land and mineral rights in Wyoming, from 13 stakeholders at the start, Hollub said. The company is conducting due diligence on the buyer and expects to complete the sale by the fourth quarter, she said, without giving an estimate. The state of Wyoming had expressed its interest in purchasing the rights.
Occidental is also considering selling assets in the Middle East and Africa for about $ 4.5 billion to the Indonesian state of PT Pertamina of Indonesia, people with knowledge of the matter said last month.
(Updates to the CEO’s comment in the seventh, eighth paragraphs.)
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