The acreage is located adjacent to Colgate’s existing position in Reeves and Ward Counties
Occidental has signed an agreement with Colgate Energy Partners III to sell its non-strategic acreage in the Permian Basin in the US for $508m.
The acquisition includes nearly 25,000 net acres in the Southern Delaware Basin in Texas. The acreage consists of about 360 active wells that produce 10,000 barrels of oil equivalent.
Occidental intends to utilise the sale proceeds towards reducing its debt.
Colgate said that the acquisition adds quality inventory directly adjacent to two of its most economic operating areas.
Occidental president and chief executive officer Vicki Hollub said: “We continue to advance our divestiture and deleveraging goals while delivering value for our shareholders.
“This transaction brings our post-Colombia divestiture total to over $1.3 billion of the planned $2 billion to $3 billion, and since August 2019 we have divested more than $9 billion of assets.”
With 1 April as the effective date, the transaction is expected to be completed in the third quarter of 2021.
The acreage included in the transaction is located adjacent to Colgate’s existing position in Reeves and Ward Counties.
According to Colgate, legacy wells are expected to add low-decline production and cash flow, supporting the company in maintaining its balance sheet.
Colgate co-CEO Will Hickey said: “The acquisition of these assets in the core of the Southern Delaware Basin is a transformational deal for Colgate that checks all of the boxes of our acquisition criteria.
“It is a great mix of low decline production and high rate of return locations that will immediately compete for capital with our existing portfolio.
“Given the proximity to our current assets, we are confident that we can leverage our ongoing operations to maximize the value of this acquisition for our investors.”
In October last year, Occidental entered into an agreement to sell its onshore assets in Colombia to The Carlyle Group for nearly $825m.