Hess to sell Permian EOR assets to Occidental for $600 million


Reuters

UPDATE 1-Hess to sell Permian EOR assets to Occidental for $600 million


(Adds details of EOR assets, stock movement)
    By Ernest ScheyderHOUSTON, June 19 (Reuters) - Hess Corp <HES.N> said on
Monday it would sell its stake in enhanced oil recovery (EOR)
projects in the Permian Basin of West Texas and New Mexico to
Occidental Petroleum Corp <OXY.N> for $600 million in cash.
    The deal cements Occidental's status as the dominant U.S.
producer of oil via carbon injection, a process favored by
environmentalists and oil producers alike, and one that could
grow in popularity if Congress expands a tax credit this
summer.[nL2N1II0S8]
    The EOR process harnesses the carbon dioxide produced during
the extraction of oil, from power plants or from natural
sources, and forces it back into aging oil fields. That boosts
the pressure underground and drives more oil to the surface.
    Occidental is not only buying out Hess's stakes in carbon
injection projects, but is also getting complete control of
naturally occurring sources of underground carbon dioxide, a
boost to the company's bottom line. The cost of carbon is one of
the largest expenses in EOR projects typically.
    For Hess, the deal gives it cash to further expand in North
Dakota's Bakken shale and the U.S. Gulf of Mexico, areas in
which it already invests heavily. The deal is expected to close
by August.
    Shares of Hess fell about 1 percent to $43.25 in morning
trading.
    Separately, Occidental said it would sell remote acreage in
the Permian for $600 million to undisclosed buyers and acquire
other acreage closer to existing wells. The deals will
effectively cut Occidental's holdings in the Permian, America's
largest oilfield, by 13,000 acres.
    Occidental declined to disclose the buyer but said the deal
was not connected to the Hess transaction. The company said the
deals should help it, one day, to break even with oil prices
<CLc1> at $50 per barrel after paying its dividend.
    Oil on Monday traded near $45 per barrel.
    "By monetizing assets in the tail of the portfolio that were
not strategic to us, but are synergistic to other companies, we
are creating value for our shareholders," Vicki Hollub,
Occidental's chief executive, said in a statement.
    Shares of Oxy fell a penny to $61.82 per share in morning
trading.

 (Reporting by Ernest Scheyder; Editing by Bernadette Baum)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))

Keywords: HESS PERMIAN/OCCIDENTAL (UPDATE 1)



This article appears in: Politics , Stocks , World Markets , Oil
Referenced Symbols: HES , OXY


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