Occidental Petroleum Divests OxyChem to Reduce Debt
Buffett-backed Occidental Petroleum is preparing its largest-ever asset sale, aiming to sell its massive OxyChem division for an estimated $10 billion. This move is critical to help the company reduce its heavy debt burden.
- Occidental is currently in discussions to sell its OxyChem division.
- The sale is expected to be worth around $10 billion.
- OxyChem is recognized as one of the world’s largest standalone petrochemicals units.
- The primary goal of this divestment is to reduce the company’s heavy debt load, which currently stands at $24 billion.
- Occidental accumulated this large debt following several significant acquisitions, including the $55 billion purchase of Anadarko Petroleum in 2019 and the $13 billion acquisition of shale oil producer CrownRock in 2023.
- If completed, this sale would represent Occidental’s biggest divestiture to date.
- OxyChem is a major revenue source, having generated almost $5 billion in revenues in the 12 months leading up to the end of June.
- The company has already made significant progress in reducing its debt, cutting it by $7.5 billion in the past year, helped by $4 billion in divestments since the start of 2024.
- Recent asset sales include four development assets in the Permian Basin and the sale of gas pipeline infrastructure to Enterprise Products Partners.
- The CEO, Vicki Hollub, has expressed satisfaction with the progress of the divestiture program and the path toward reducing debt.
- The broader petrochemical industry, which OxyChem operates in, is currently experiencing tight margins due to a supply glut (excess capacity coming from the US, Middle East, and China).
- This challenging industry environment is leading to rapid change, with more than 300 consolidation deals announced in 2024 alone.