Occidental Petroleum’s Permian acquisitions
On October 31, 2016, Occidental Petroleum (OXY) announced the acquisition of producing and nonproducing leasehold acreage in the Permian Basin from private sellers. In a separate transaction, OXY also acquired interests in several Permian Basin EOR (enhanced oil recovery) and CO2 properties, and related infrastructure.
The total purchase price for these transactions is ~$2 billion, which OXY funded from its existing cash on hand.
Occidental Petroleum’s Permian resources acquisitions
Occidental Petroleum’s (OXY) Permian resources acquisitions include ~35,000 net acres in Reeves and Pecos counties, Texas, in the Southern Delaware Basin, in areas where Occidental currently operates or has working interests. Currently these properties are producing ~7,000 boe (barrels of oil equivalent) per day of net production from 68 horizontal wells. The current production from these properties has ~72% crude oil in its production mix.
Based on 4Q15 costs, acreage from OXY’s Permian resources acquisitions has breakevens below $50 per barrel crude oil prices.
Occidental Petroleum’s Permian EOR acquisitions
Occidental Petroleum’s Permian EOR acquisitions includes working interests in producing oil and gas CO2 floods and related EOR infrastructure. Currently, these properties are producing ~4,000 boe per day of net production with ~80% crude oil in the production mix.
These properties have estimated net proved developed producing reserves of ~25 MMboe (million barrels of oil equivalent) and total proved reserves of ~41 MMboe.
Other upstream players
Many upstream companies are venturing out to add quality acreage in their portfolio at attractive prices. In 3Q16, Range Resources (RRC) closed its merger with Memorial Resource Development (MRD) in an all-stock transaction valued at $4.4 billion.
In 3Q16, Antero Resources (AR) acquired Marcellus Shale acreage from Southwestern Energy (SWN) for ~$450 million.
On November 2, 2016, Occidental Petroleum (OXY) had an implied volatility of ~26.8%, which is ~3.6% below its 260-trading day historical price volatility of ~27.8%.
For 3Q16, Occidental Petroleum (OXY) reported production from ongoing (or core) operations of 605 Mboe per day, which is at the higher end of its 3Q16 production guidance range of 600–605 Mboe per day.
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