By OGJ editors
HOUSTON, Oct. 14 -- Occidental Petroleum Corp. has agreed to acquire Tulsa independent Vintage Petroleum Inc. for $3.8 billion and the assumption of $550 million of Vintage debt.
At yearend 2004, Vintage had proved reserves of 437 million boe—50% of which were in Argentina and 32% in the US—and 421 million boe of probable and possible reserves. During the second quarter of this year, its total production averaged 76,000 boe/d, with Argentina contributing 37,000 boe/d and California, 11,000 boe/d.
Oxy had total yearend proved reserves from all sources of 2.53 billion boe. The acquisition is expected to increase Oxy's reserves to a record high of 3 billion boe and extend its reserve life at current production levels to 12.7 years from 12.2 years.
The company plans to invest $150-200 million/year to increase Vintage's reserves and production and expects to cut general and administrative expenses by $40-60 million/year and exploration capital expense by $100 million/year.
Oxy said it could apply enhanced oil recovery and exploitation techniques to Vintage's operations in California, which will be incorporated into Oxy's nearby southern San Joaquin Valley and Sacramento Valley operations. In Latin America, Vintage's Argentinian production will join the 70,000 b/d Oxy produced in the second quarter in Colombia and Ecuador.
"We hope to double Vintage's production from Argentina within 5 years as well as increase production from California by up to 20% over the next few years," said Ray R. Irani, Oxy chairman, president, and chief executive officer.
Vintage's second-quarter production in Yemen averaged nearly 4,000 b/d of oil from fields adjacent to Oxy's operations.
Oxy indicated an interest in divesting Vintage assets in East Texas, along the Gulf Coast, and in the Midcontinent region. These assets accounted for 19,000 boe/d of Vintage's second-quarter production this year.
Oxy expects to finance the acquisition—and a 9 million Oxy share stock repurchase program—from $1.7 billion of cash on hand as of Sept. 30 plus additional cash generated in the fourth quarter. Vintage is expected to have $225 million in cash at yearend.
The Vintage transaction is expected to close in the first quarter of 2006, subject to regulatory approvals.