US firm oil and gas exploration and production firm Occidental Petroleum (Oxy) has completed a $1.5bn joint venture (JV) with Colombian state-run oil company Ecopetrol.
Through the JV, which was initially announced in August, Oxy agreed to form a JV with Ecopetrol to develop unconventional reservoirs in approximately 97,000 acres of Permian Basin in Texas, US.
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As part of the JV, Ecopetrol acquired a 49% stake in Rodeo Midland Basin while the remaining 51% is owned by Occidental.
Ecopetrol has paid an initial amount of $876.5m, $126.5m of which is related to the estimated expenditures of the development plan under the current year.
The JV enables Occidental to enhance its development plans in the Midland Basin, where the company is less active.
It is completely in line with the Ecopetrol’s strategic priorities as outlined in the 2019-2021 business plans, focussing on reserves and production growth.
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By GlobalDataThe transaction is expected to add approximately 160 million barrels of oil-equivalent (Mmboe) to Ecopetrol’s proven reserves by the end of this year.
In another statement, Occidental said it has closed the sale of selected non-core assets for $200m.
Commenting on the completion of the JV formation and sale of additional non-core assets, Occidental CEO Vicki Hollub said: “We are highly confident that the actions we already have in progress will allow us to exceed the upper end of our original $10bn to $15bn divestiture goal by the middle of 2020.
“Closing the Midland Basin Joint Venture and completing the sale of additional non-core assets are the latest examples of Occidental’s progress towards further strengthening our balance sheet.”
