Occidental mulls sale of Anadarko’s Western Midstream stake

Occidental Petroleum Corp. is seeking a buyer to take majority control of Western Midstream Partners LP, the pipeline operator that it’s poised to inherit through its takeover of Anadarko Petroleum Corp., according to people familiar with the matter.

Occidental is working with a financial adviser to solicit offers for half of Anadarko’s interest in Western Midstream and Western Midstream’s general partner, or management entity, said the people, who asked to not be identified because the matter isn’t public.

The potential buyer of those stakes would also seek to acquire the 45 per cent of Western Midstream that is traded publicly, the people said. That would leave Occidental with a minority stake in Western Midstream, the people said, enabling it to keep financial and operational interest in infrastructure for getting its oil and gas to market.

The stakes could draw interest from private equity firms and rival pipeline operators such as Oneok Inc., Enterprise Products Partners LP and Energy Transfer LP, one of the people said. No decision has been made and Occidental could opt to not proceed with a sale, they said.

Representatives for Occidental, Anadarko and Enterprise Products declined to comment.

Representatives for Oneok and Energy Transfer didn’t respond to requests for comment.

Western Midstream rose 2.2 per cent to close at US$29.37 in New York trading Monday, giving The Woodlands, Texas-based company a market value of about US$13.3 billion.

Anadarko owns 55.5 per cent of Western Midstream and all of its general partner, according to regulatory filings.

Anadarko Deal

Occidental is poised to acquire Western Midstream after agreeing in May to buy Anadarko for US$38 billion, a deal expected to close in the second half of 2019. Occidental has said it would be open to selling Western Midstream after outbidding Chevron Corp. for Anadarko.

“We don’t really feel like we have to necessarily own infrastructure to take advantage of it,” Vicki Hollub, Occidental’s chief executive officer, said in a conference call with analysts on May 6. “We would be willing to consider the optimization, monetization, of that sooner rather than later depending on the potential buyer.”

Western Midstream controls more than 15,200 miles of pipelines and about six dozen processing and treatment facilities in the Midwestern U.S. and Texas, according to an investor presentation in May. Anadarko formed the company and took it public in 2012 as a so-called master limited partnership, or entity that gets tax breaks in exchange for doling out most of its profits to investors.

A potential sale could help Occidental meet its goal of selling US$10 billion to US$15 billion of assets to pay down debt over the next two years. The company has already agreed to sell Anadarko’s operations in Africa for US$8.8 billion to Total SA.


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