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Friday, December 10, 2010

Oxy Bets On The Bakken

This is huge. I have to thank "James" for alerting me to this story.

Oxy bets on the Bakken (MarketWatch).  The Motley Fool article on OXY/Bakken.

This story just broke about 10:30 a.m. EST, Friday, December 10, 2010.

Details:
  • Oxy to sell interests in Argentina, to China Petrochemical Corp (Sinopec)
  • Oxy will buy 180,000 acres in the Bakken and Three Forks formations in North Dakota from a private seller for $1.4 billion ($7,777/acre -- same "ballpark" as ERF and WMB recent purchases).
  • Oxy is also a key player in ownership of Plains All American Pipeline, LP.
For OXY investors there is much more to the story, including a significant hike in the dividend. See link.

With regard to "Plains All American Pipeline LP," I posted the following in mid-November:
Plains All American Pipeline, L.P., today announced that it has entered into a definitive agreement with Nexen Holdings U.S.A. Inc. to purchase entities that hold crude oil gathering and transportation assets that primarily service Bakken area producers. Total consideration is estimated at $210 million, including approximately $170 million for the business and physical assets and approximately $40 million for approximately 400,000 barrels of inventory and other working capital adjustments. Subject to regulatory approval, the transaction is scheduled to close by year-end 2010.

The assets are primarily located in Northwestern North Dakota and Northeastern Montana and include: a lease gathering business that currently handles approximately 55,000 barrels per day; the Robinson Lake pipeline, a FERC regulated 20-mile, 8-inch pipeline that currently handles approximately 18,000 barrels per day; 8 truck terminals and various other contractual rights.

    8 comments:

    1. Who is next in line to cash in? I think the flurry will peak in the third quater next year (just a guess). I wonder if Al global warming Gore still holds all those Oxy stocks?

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    2. I won't argue that activity (mergers/acquisitions) will peak by third quarter next year. For the past few months I've been opining that 2011 will be another watershed year for the Bakken. I have no idea how the "private" seller was, but it would be hard to turn down $1.4 billion. It's very possible we will get the answer in Forbes Magazine annual richest Americans issue.

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    3. i wonder if the private party was Anschultz.

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    4. It certainly could have been. Anschutz has been at the back of my mind ever since they announced they were selling. It seems I remember that Anschutz announced they found a buyer but maybe I was dreaming. Regardless, it would be very possible. I'm sure the OXY/CEO and Mr Anschutz visit the same watering holes. Perhaps the deal was promulgated during the North Dakota hunting season.

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    5. Oxy signs my Royality checks now instead of Anshutz. That pretty much says it all.

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    6. You are correct. It was fun connecting the dots back in December, 2010. This is one of the big reasons I enjoy blogging on the Bakken. Readers have picked up on many developments well before the mainstream media has picked up on them.

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