Ecopetrol Group has announced the commencement of negotiations with Occidental Petroleum (Oxy) to purchase Permian Basin assets acquired from CrownRock.
According to a news release from Ecopetrol, the acquisition interest will be subject to an evaluation of the asset's worth. The company will finance the valuation as it begins negotiations with Oxy.
According to a filing with the Securities and Exchange Commission (SEC), Oxy plans to use the proceeds from the assets, valued at up to $3.6 billion, to reduce its debt. In 2019, Oxy and Ecopetrol established a partnership to develop and operate oil and gas properties in the Midland Basin.
Once considered home to the world's largest unrecoverable oil reserves due to its tight rock formations, the Midland Basin has become a significant player in U.S. production since the introduction of hydraulic fracturing techniques. "Under that joint venture, each of Occidental Midland Basin and Ecopetrol were given the right, subject to certain conditions, to participate in oil and gas interests acquired by the other and its affiliates in an area of mutual interest," Oxy said in its recent filing with the SEC.
"On May 31, 2024, Ecopetrol notified Occidental of its intent to acquire an undivided thirty percent (30%) interest in the CrownRock assets, subject to the negotiation of a mutually agreeable transaction structure," said Oxy's filing. If a deal on the transaction is not reached, "Ecopetrol will have an option to elect for the Rodeo Midland Basin Joint Venture to acquire the CrownRock assets, resulting in an indirect ownership by Ecopetrol of an undivided 49% interest in the CrownRock assets," stated Oxy's filing.