Oxy SellsBakkn Acreage | Russell T. Rudy Energy LLC
“Rigzone” reports that Occidental Petroleum Corp. is selling roughly 300,000 acres in North Dakota’s Bakken shale. While Oxy is not strapped for cash, the sale will enable the company to remain cash neutral during the current industry downturn and concentrate on other plays. The Bakken assets were sold for $500 million to a private equity fund. The proceeds were only about one-sixth of what Wall Street analysts had expected. Significantly, Oxy set the bar for future deals quite low with this unexpectedly cheap settlement. While the company was willing to accept this price, the implications for some Bakken operators are grim. With this sale, it appears that buyers clearly will have the upper hand in future transactions.
ConocoPhillips, Whiting Petroleum Corp., and Oasis Petroleum Inc. are all looking to sell assets in the Bakken and the Oxy deal is certainly not good news for them. Conoco, like Oxy, is not depending on these sales for its survival. Nevertheless, it is looking to net $2 billion from sales of properties in the Rockies, East Texas, South Texas, and North Louisiana. Now it is questionable if the company can realize this much cash from these assets.
Whiting is anticipating selling its interest in mid-stream assets such as pipelines and saltwater disposal systems in order to raise cash for continued development and production operations. Oasis, which only operates in North Dakota, is looking to sell all its saltwater disposal business in order to fund ongoing operations. Its situation is especially acute since banks recently cut its credit line by roughly $170 million as part of this fall’s reserve revaluations. Oasis had originally hoped to receive $880 million from the sale of the saltwater disposal assets, but in light of the Oxy deal, this is looking unlikely.
To read the article in its entirety, please go to http://www.rigzone.com/news/article.asp?hpf=1&a_id=141134&utm .
