Occidental Petroleum said Monday it will make its pipeline arm, Western Midstream Partners, an independent company and reduce its ownership stake in the firm in order to cut its overall debt load.
Houston-based Oxy acquired Western as part of its massive $38 billion purchase of Anadarko Petroleum last year, and a potential sale of Western was considered one of the best ways to help Oxy pay off the deal.
However, Western’s market value plunged by about 30 percent last year, putting any possible sale on hold. Western’s market value is currently about $10 billion.
“We repaid $7 billion of debt less than five months after closing our acquisition of Anadarko and will continue to reduce debt in 2020 with proceeds from asset divestitures and free cash flow,” said Oxy Chief Executive Vicki Hollub.
As part of the deal, Oxy said it will transfer employees to Western and provide limited administrative services for up to two years during the transition.
Just last week, Oxy said it would sell the twin-tower Anadarko headquarters in The Woodlands – while leasing back one tower – and the old ConocoPhillips campus in the Houston Energy Corridor for a combined $565 million to the Howard Hughes Corp. to help further reduce Oxy’s debt. Oxy had originally intended to move its headquarters to the Conoco campus but nixed those plans after buying Anadarko, deeming the campus too small to accommodate everyone.
Instead, Oxy will maintain a presence in The Woodlands as well as its current headquarters in Houston’s Greenway Plaza.
But the biggest part of Oxy’s debt reduction thus far is the ongoing $8.8 billion sale of Anadarko’s Africa assets to the French energy major Total.
This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.