Occidental Petroleum Corp. executed several agreements that will enable its subsidiary Western Midstream Partners LP to operate as an independent midstream company.
Occidental said in a Jan. 6 news release that it plans to continue its operational relationship with the partnership but will cut its interest in Western Midstream to below 50% during the year. As a result, Occidental will no longer consolidate Western Midstream's financial reporting.
The agreements transfer the employment of Western Midstream's management team and employees to the partnership from Occidental and expand the rights of Western Midstream unitholders to remove and replace Occidental as the general partner. Occidental will provide administrative services to Western Midstream for up to two years, the release said, and new oil and gas gathering acreage dedications for about 21,000 acres in Weld County, Colo., will be executed. The acreage dedications are underpinned by minimum volume commitments.
Occidental also retired $2 billion of its 2021 bank loans during the fourth quarter of 2019 using the proceeds from its free cash flow and divestitures, which include the corporation's previously announced $565 million deal with Howard Hughes Corp.
In addition, Occidental raised the volume of its hedged oil production for the year by 50,000 barrels of oil per day to 350,000 boe/d. The company said its free cash flow increases by $260 million per year for every $1 increase in oil prices.