Occidental Petroleum Corp said on Monday it would cut its majority stake in pipeline operator Western Midstream Partners LP to less than 50 per cent in 2020, as it looks to reduce its debt that grew significantly with the Anadarko deal.
The oil and gas producer on Sunday gave up over 9 million shares, or a 2 per cent stake in Western Midstream’s general partner, and allowed limited partners to remove Occidental and appoint a new general partner.
Occidental fully owns the general partner stake, which effectively controls Western Midstream – a master limited partnership, and around 55 per cent of the pipeline operator’s limited partner units.
The agreements with Western, acquired in 2019 as part of the $38-billion acquisition of Anadarko Petroleum Corp, will allow it to operate on an independent basis, Occidental said on Monday. Reuters had earlier reported that Occidental wanted to reduce its holdings enough to stop accounting for the almost $7.6 billion of Western’s debt load on its own books.
Houston-based Occidental said it was on track to meet its $15 billion divestiture target it had set to cut down the almost $40-billion in debt it took on as part of the Anadarko deal.
The net long-term debt for Occidental was $47.6 billion as of Sept. 31, 2019.
With the recent sale of some real estate holdings to Howard Hughes Corp, Occidental has raised over $10.5 billion so far through property sales. It said it has also retired $2-billion of 2021 bank term loans in the fourth quarter.