Occidental Petroleum Corp. (Oxy) is reportedly selling its 300,000 acres in North Dakota's Bakken Shale play to Houston-based private equity fund Lime Rock Resources in a deal valued at $500 million, far less than Oxy's holdings were estimated to be worth less than two years ago.
Reuters news service on Friday reported a deal has been struck. So far, the North Dakota Petroleum Council and state Department of Mineral Resources (DMR) know nothing about a sale, spokespersons at each told NGI's Shale Daily Friday. Eventually, the DMR would have to approve the transfer of any wells and permits involved in the sale.
A spokesperson at the Houston-based exploration and production (E&P) company declined to comment on the sale report. Oxy has scheduled its 3Q2015 earnings conference call for Oct. 28. Lime Rock already owns producing Bakken properties and has a strategy to add more there, according to its website.
Oxy's holdings are outside of the core Bakken producing counties, mostly in Dunn and Stark counties. Dunn is the fourth-largest county in North Dakota in terms of producing wells but still far behind McKenzie and Williams counties.
In recent months, senior executives at Oxy have said the company's Bakken holdings could not compete with its Permian Basin assets in Texas. A year ago, Oxy CEO Steve Chazen said the company's assets in the Bakken and Piceance would eventually be sold (see Shale Daily, Oct. 24, 2014).
Although the fourth-largest U.S. oil producer, Oxy ranks only 16th in the Bakken with several much smaller companies producing more. Oxy built a 21,000-square-foot regional headquarters in Dickinson, ND, three years ago that is reportedly part of the sale.
An acquirer and operator of various U.S. producing oil and gas properties, Lime Rock a year ago closed two E&P acquisitions totaling $533 million of working interests in oil and gas properties in North Dakota's Williston Basin in Mountrail County, the third most active oil/gas county in the state.
An acquisition completed in March 2014, and representing Lime Rock’s first in North Dakota, comprised non-operated interests in 337 active wells in the middle Bakken and Three Forks plays, according to an announcement from the private equity firm in October 2014.
At the time, Eric Mullins, Lime Rock co-CEO, said acquiring interests that he called a "right-sized entrance into the Bakken" and diversifying the company's property base would allow Lime Rock "to learn the area from a non-operated perspective." Over time, as in past acquisitions, "we will seek opportunities to add to our position taking advantage of knowledge learned and our local presence in the area,” Mullins said.
Through three private funds and LRR Energy, Lime Rock acquires, operates, and seeks to improve producing oil and gas properties in the United States. According to its public disclosures, the private firm is acquiring "a diverse group of proved oil and gas properties to provide its investors with attractive long-term returns." Established in 1998, Lime Rock management has raised $5.5 billion in private equity funds for investment in the energy industry.