Oil and gas producer Occidental (NYSE:OXY) is planning to sell its stake in Western Midstream Partners (NYSE:WES), Reuters reported. According to the report, Western Midstream Partners, which transports natural gas, has a market value of about $20 billion.
Following the release of the news, WES stock fell about 3.2% in Tuesday’s after-hours trading. However, OXY was slightly in the green.
Deal Benefits
Occidental owns a 50.4% stake in Western Midstream, representing 49.5% of its outstanding common units and 9,060,641 General Partner units. It is to be highlighted that OXY had a net long-term debt of $18.54 billion at the end of Q4.
Thus, this divestment would help Occidental to deleverage its balance sheet, grow dividends, and boost share repurchases.
Western Midstream’s Response
In response to the news, Western Midstream Partners’ management clarified that they have not initiated any sales procedures, nor have they employed the services of bankers or other advisors for such purposes.
Nonetheless, they acknowledge Occidental Petroleum’s interest in divesting assets. However, they cannot provide details regarding the specific assets that OXY may plan for divestment.
Is OXY Stock Expected to Go Up?
OXY’s share price has remained largely flat over the past year as lower crude oil and natural gas prices have restricted the upside. Further, Oxy stock has a Moderate Buy consensus rating based on seven Buy and eight Hold recommendations.
Analysts’ average price target of $67.60 implies 13.5% upside potential from current levels.
