Hess, Occidental Petroleum Agree to $600 Million Deal in Permian Basin

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Researched by Industrial Info Resources (Sugar Land, Texas)--Hess Corporation (NYSE:HES) (New York, New York) has agreed to sell its interests in enhanced oil recovery (EOR) assets in the Permian Basin to Occidental Petroleum Corporation (NYSE:OXY) (OPC) (Houston, Texas) for $600 million. Both companies see the deal as a doorway to new growth opportunities. Industrial Info is tracking $8.25 billion in active projects involving Hess and $1.31 billion involving OPC.

Hess said in a press release that the transaction comprises Hess-operated assets that produced an average of 8,200 barrels of oil equivalent per day in 2016: an EOR field and a gas-processing plant in Seminole, Texas, and the West Bravo Dome C02 field and a related unit in Mosquero, New Mexico. Industrial Info is tracking progress at each of these facilities and offers comprehensive plant profiles on the Seminole field and gas plant, and Bravo Dome field.

The deal is expected to close in August. Hess sees it as part of an effort to fund growth opportunities through divestment from its less successful properties and taking stakes in growing developments, such as its 30% interest in Exxon Mobil Corporation (NYSE:XOM) (ExxonMobil) (Irving, Texas) $600 million Liza FPSO project offshore Guyana. The floating production storage offloading (FPSO) facility, greenlit last week, is expected to exploit crude oil and natural gas from the Liza-1, Liza-2 and Liza-3 wells in the Stabroek Block on Guyana-Suriname Basin. Currently, it is expected to have a processing capacity of 100,000 barrels per day (BBL/d) and storage capacity of 1.6 million barrels. For more information, see Industrial Info's project report.

The Liza project is one of the few large-scale deepwater projects moving forward, as low oil prices have hindered numerous other developments. Hess, ExxonMobil and China-based partner CNOCC Nexen Petroleum Guyana Limited believe the area holds 2 billion to 2.5 billion barrels of oil equivalent.

OPC, for its part, is dropping 13,000 acres in the Permian Basin (specifically in Andrews, Martin and Pecos counties in West Texas) to shift its focus to other developments. The company has proposed a $30 million expansion of the Bridgetex Pipeline, a joint venture with Magellan Midstream Partners LP (NYSE:MMP) (Tulsa, Oklahoma), in northern Texas. OPC also is preparing for a $10 million debottlenecking at Slaughter Gasoline and Natural Gas Processing Plant near Sundown, Texas, which is expected to boost capacity from 62 million to 70 million standard cubic feet per day. The project would boost throughput capacity from 400,000 to 475,000 BBL/d. For more information, see Industrial Info's reports on the Bridgetex Pipeline and Slaughter debottlenecking.

OPC is seeing growth in other industries as well. Occidental Chemical Corporation, a subsidiary, is at work on a $145 million unit addition at a chlorinated hydrocarbons plant in Geismar, Louisiana. It is expected to produce about 18,000 metric tons per year by using ethylene, carbon tetrachloride, iron powder and other feedstock. The project is expected to wrap up in late October. For more information, see Industrial Info's project report.

Industrial Info also is tracking nearly $1 billion in OPC-related production and pipeline projects in Qatar, and more than $150 million in scheduled maintenance projects at OPC facilities in the U.S. and Canada.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.