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Occidental to cut WES stake
Posted on Tuesday, 07 January 2020 11:06
Occidental Petroleum intends to reduce its equity holding in Western Midstream Partners (WES) to below 50.0 per cent this year as part of plans to trim a debt mountain taken on with the acquisition of Anadarko.
The hydrocarbon explorer will carry out several steps that will help the New York Stock Exchange-listed pipeline and processing arm to operate as a standalone business, though the two will continue a long-term partnership.
Executed agreements include amendments to the limited partnership contract that significantly expand unitholders’ rights, which would include the ability to remove and replace Occidental as the general partner.
Other terms feature the transfer of the WES corporate officers’ employment from its parent to the partnership, which means the group’s financial information will be reported under the equity method of accounting.
These new agreements support the pipeline company’s “ongoing and focused pursuit of third-party growth opportunities” and underscore the importance of its commitment “to leverage existing midstream infrastructure to attract additional Occidental and third-party volumes”.
WES is a growth-orientated master limited partnership formed to own, acquire, develop and operate midstream energy assets in the Rocky Mountains, North-central Pennsylvania, Texas and New Mexico.
The group is involved in gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilising, and transporting condensate, natural gas liquids, and crude oil; and gathering and disposing of produced water for Occidental and third-party customers.
In the nine months ended 30th September 2019, it recorded revenue of USD 1.76 billion and a net profit of USD 512.26 million.
As of 30th September 2019, Occidental held a 55.4 per cent limited partner interest in WES and, through its ownership of the general partner, indirectly owned the entire non-economic general partner interest in the group.
The hydrocarbon explorer inherited its participation when it took over Anadarko.
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