Occidental in talks about Ecopetrol investing in CrownRock assets

In a regulatory filing on Friday, Occidental Petroleum (OXY) disclosed that Occidental and Ecopetrol (EC) are engaged in discussions regarding a structure for Ecopetrol’s potential acquisition of an undivided thirty percent interest in the CrownRock assets. If consummated, Occidental expects the Ecopetrol Transaction purchase price to be approximately $3.6B, which equates to approximately thirty percent of the aggregate consideration to be paid by Occidental in connection with the acquisition of CrownRock, subject to customary purchase price adjustments based on a January 1, 2024 effective date. “If a definitive agreement is entered into, Occidental expects it will be subject to the satisfaction or waiver of customary closing conditions, including, among other things, the expiration of the waiting period under the HSR Act, the receipt of approval from the Committee on Foreign Investment in the United States and the closing of the Acquisition. However, there can be no certainty that Occidental and Ecopetrol will enter into a definitive agreement with respect to the Ecopetrol Transaction, about the timing, terms or conditions of any such definitive agreement or, if any such agreement is entered into, that the Ecopetrol Transaction would be completed. If Occidental and Ecopetrol are unable to reach agreement regarding the structure of the Ecopetrol Transaction and the joint ownership, development and operation of the CrownRock assets related to such Ecopetrol Transaction in August 2024, then 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 forty-nine percent interest in the CrownRock assets. This option expires in August 2024, and there is no assurance that Ecopetrol can or would exercise such an option. Occidental expects to use any proceeds from the Ecopetrol Transaction to pay down a portion of its term loans,” the filing stated.