Occidental Petroleum (OXY) has inked a deal with Colgate Energy Partners III to sell its non-strategic acreage in the Permian Basin for $508 million.
Shares of the hydrocarbon exploration and petroleum company have jumped 62.7% over the past year.
The divestiture comprises 25,000 acres in the Southern Delaware Basin in Texas. The region boasts 360 active wells that currently produce 10,000 barrels of oil equivalent per day.
OXY CEO Vicki Hollub said, “We continue to advance our divestiture and deleveraging goals while delivering value for our shareholders. This transaction brings our post-Colombia divestiture total to over $1.3 billion of the planned $2 billion to $3 billion, and since August 2019 we have divested more than $9 billion of assets.”
OXY intends to utilize the sale proceeds towards the reduction of debts. (See OXY stock analysis on TipRanks)
The deal is expected to close in the third quarter of 2021, subject to certain regulatory approvals. The company’s financial guidance for the year remains the same.
Mizuho Securities analyst Daniel Boyd recently increased the price target from $33 to $36 (27.07% upside potential) and reiterated a Buy rating on the stock.
Boyd believes global oil demand will reach pre-pandemic levels by the fourth quarter and has raised Brent’s forecast to $66 and $70 for 2021 and 2022, respectively, versus the prior expectation of $60.
Overall, the stock has a Moderate Buy consensus rating based on 7 Buys, 6 Holds and 2 Sells. The OXY average analyst price target of $29.86 implies 5.4% upside potential from current levels.