Occidental Petroleum Corporation has announced that, in connection with Occidental’s proposal to acquire Anadarko Petroleum Corporation, it has entered into a binding agreement to sell Anadarko’s Algeria, Ghana, Mozambique and South Africa assets to Total S.A. for $8.8 billion. The sale is contingent upon Occidental entering into and completing its proposal to acquire Anadarko, and would be expected to close simultaneously or as soon as reasonably practicable afterwards.
This type of sell-off is exactly what World Oil, in its recent analysis of the Anadarko situation, predicted might happen. Click here to read the analysis, pre-Warren Buffett.
The assets to be sold to Total represent approximately 6% of the expected net production and approximately 7% of the cash flow after capital expenditures of Occidental in 2020 pro forma for the acquisition of Anadarko.
The proceeds of the sale of these high quality non-strategic assets covers a portion of the cash consideration to fund the proposed acquisition of Anadarko. The sale fast-tracks the divestiture plan previously described by Occidental, delivering on the majority of the $10 to $15 billion of planned asset sales. It also reduces the overall integration demands of the acquisition. After giving effect to the asset sale, Occidental continues to expect to deliver $2.0 billion of annual cost synergies and $1.5 billion of annual capital reductions from the proposed acquisition of Anadarko.
“We are pleased to have secured this agreement with Total. The $8.8 billion value to be received for Africa represents an attractive value based on our extensive evaluation over the last 18 months. Given our long history of working together productively, I am confident we can execute this sale quickly and efficiently,” said Occidental President and CEO Vicki Hollub. “Total has extensive experience working in Africa and is well positioned to maximize value from these assets.”
“These are world class assets with great upside, and we welcome the opportunity to leverage our expertise in LNG and deepwater developments as well as our long history of operating in Africa,” said Patrick Pouyanné, chairman and CEO of Total. “We have worked successfully with Occidental for many years and we are committed to execute smoothly this transaction.”