Occidental Petroleum Corporation has sold its onshore Colombian assets to The Carlyle Group for $825 million, in a transaction that will entail a $700 million upfront payment to be followed by the remainder payable subject to production and commodity price targets.
The assets include operations and working interests in the Llanos Norte, Middle Magdalena and Putumayo Basins.
Occidental will retain a presence in the South American country with its exploration blocks offshore Colombia.
The deal is expected to close in the fourth quarter of this year.
"Occidental has operated in Colombia, in partnership with Ecopetrol, for more than 40 years and is honored to remain a key partner in driving the country’s energy evolution," the company’s president and CEO Vicki Hollub said.
"We have expanded our strategic partnership with Ecopetrol to the onshore U.S. and to exploration blocks offshore Colombia. These highly prospective offshore blocks hold tremendous potential that could significantly bolster the country’s energy resources," she added.
Occidental has announced over $2 billion of divestitures in 2020, and which are expected to close by year-end, and the company continues to advance additional asset sales.
Occidental has operations in the US, the Middle East, Africa and Latin America, and is one of the largest oil producers in the US, including a leading producer in the Permian and DJ Basins, and offshore Gulf of Mexico.
The Carlyle Group said that equity for the transaction will come from the Carlyle International Energy Partners platform, which invests in oil and gas opportunities outside North America, notably in Europe, Africa, Latin America and Asia. CIEP has long since recognized Colombia as an attractive country to invest in given its large and productive oil and gas industry and stable history of oil & gas production.
CIEP has significant experience in country, including through two active investments that operate in the Colombian upstream sector, COG Energy and CEPSA.
“Drawing on its local market knowledge and deep energy expertise, Carlyle will pursue a strategy of field life extension and operating efficiency, as well as building on Colombia onshore’s leading ESG initiatives,” The Carlyle Group said.
“There is also the potential for the company to act as a platform for further growth in the region,” it added.
For its upstream investments in Colombia, Carlyle works with energy veteran Tony Hayward (ex-CEO of BP, current Chairman of Glencore). Mr Hayward will become Executive Chairman of the Colombia Onshore business. He has many years of extensive experience in Colombia, including being based in the country during his time at BP.
“We are excited to acquire Occidental’s onshore operations in Colombia,” Marcel van Poecke, head of Carlyle International Energy Partners, said.
“Through four decades, Occidental has established a high quality and resilient portfolio of assets in a country that is attractive for investment. We look forward to being responsible stewards through our significant experience of managing energy assets globally, our local industry knowledge, as well as leveraging the wealth of experience that Tony has amassed over his years in the sector,” he added.
Law firm White & Case advised Occidental Petroleum with a team led by partners Jay Cuclis and Emery Choi in the firm’s Houston office, and which also included Houston partners Mingda Zhao, Bill Parish and Chad McCormick.
The team also featured partners Richard Jones in London, Seth Kerschner in New York, Rebecca Farrington and Daniel Levin in Washington, DC, David Hille in New York and Cristina Brayton-Lewis in Washington, DC.
The team also included counsels Fern Han (Houston) and Jeremy Kuester (Washington, DC); Houston associates Danny Hatch, James Langlois, Nicole Rodriguez-Fierro, Carlos Ramon Diaz Sordo, Michael Rodgers and Katherine Raunikar; Washington, DC associates Ashley Williams and Sandra Jorgensen; and Miami associate Amanda Parra Criste.
Colombian law firm Gómez-Pinzón Abogados acted as legal counsel to the Carlyle Group with a team led by partners José Luis Palacios, Andrés Hoyos and José Luis Suárez, assisted by senior associates Lina Correa Posada, Andrés Felipe Fonseca and Catalina Prieto Núñez and assocates Juan Pablo Perdomo, Nicolás Rocha Pesántez and Andrés Eduardo Gómez.