Colombia's Ecopetrol SA and Occidental Petroleum Corp. received U.S. regulatory approvals to form a joint venture to develop 97,000 net acres of Occidental's Midland Basin properties in the Permian Basin, according to an Oct. 22 news release.
Ecopetrol announced July 31 that it will pay $750 million in cash and $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. During the carry period, Ecopetrol will pay 75% of Occidental's share of capital expenditures.
The venture would allow Ecopetrol to book 160 million barrels of oil equivalent of proved undeveloped reserves when the deal closes. Occidental CEO Vicki Hollub touted the venture on the company's second-quarter earnings call, saying it was "an excellent opportunity to bring forward the net present value of our Midland assets without sacrificing any of our current production or cash flow."
The transaction is expected to close by year-end.