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Ecopetrol, Occidental Petroleum partner to develop Midland Basin assets

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Ecopetrol, Occidental Petroleum partner to develop Midland Basin assets

Colombia's Ecopetrol SA and Occidental Petroleum Corp. have formed a joint venture to develop 97,000 net acres of Occidental's Midland Basin properties in the Permian Basin, according to a July 31 news release.

Ecopetrol will pay $750 million in cash as well as $750 million in carried capital in exchange for a 49% interest in the venture. Occidental Petroleum will hold a 51% interest and will be the venture's operator. In addition, during the carry period, Ecopetrol will pay 75% of Occidental's share of capital expenditures, the release said.

The joint venture will allow Ecopetrol to book 160 million barrels of oil equivalent of proved undeveloped reserves when the deal closes, the company said. Ecopetrol estimates its share of output will be about 95,000 barrels of oil equivalent per day when production reaches its peak in 2027.

In addition, Ecopetrol incorporated two new companies, Ecopetrol Permian LLC and Ecopetrol USA Inc., to develop the joint venture and converted Ecopetrol America Inc. into Ecopetrol America LLC, which will continue to focus on operations in the U.S. Gulf of Mexico.

The deal is subject to approval from U.S. authorities and is expected to close around year-end.