Vicki Hollub, President and CEO of Occidental Petroleum Corp., speaks in 2017 CERAWeek of the IHS Markit Conference in Houston, Texas.
F. Carter Smith | Bloomberg | Getty Images
Occidental Petroleum has reached an agreement to sell Anadarko Petroleum's African oil and gas shares to French oil company Total for $ 8.8 billion.
The agreement is conditional on Occidental first agreeing to buy Anadarko and close the agreement. Occidental competes with Chevron to acquire Anadarko.
The announcement on Sunday gives some clarity on how Occidental would finance its purchase and sale of anadarko. Occidental had said it would try to sell $ 1
Occidental said the sale of Anadarko's assets in Algeria, Ghana, Mozambique and South Africa to Total would also reduce the challenges of integrating the two drills. The agreement with Total is a binding agreement, and the disposal of the African assets will take place simultaneously. Occidental signs an agreement to buy Anadarko or shortly after.
"Given our long history of working together productively, I am convinced that we can do this sale quickly and effectively," Occidental CEO Vicki Hollub said in a statement. "Total has extensive experience working in Africa and is well positioned to maximize the value of these assets."
The sale would leave Occidental with Anadarko's holdings in US shale pools, the Gulf of Mexico and South America. Occidental is primarily interested in Anadarko's area in the Permian Basin, the top American shale area that extends from western Texas to southeastern New Mexico.
Chevron reached an agreement to buy Anadarko for $ 33 billion last month, but Occidental later offered a higher offer. Anadarko's Board is currently considering Occidental's bid.
Anadarko's global footprint is widely seen by analysts as being better suited to Chevron's portfolio, especially the former Mozambique's liquid natural gas project. Chevron is a major player in the market for LNG, or natural gas super-cooled to liquid form for transportation.
The proceeds from the real estate sale to Total will go towards financing the cash portion of Occidental's offer to Anadarko. The transaction is structured as a 50-50 share agreement.
The agreement with Total is the latest attempt by Occidental to give investors some certainty about financing the agreement. Last year, the company showed an investment of $ 10 billion from Warren Buffett's Berkshire Hathaway, which is also conditional on the termination of the Anadarko Agreement and the financing of the cash portion of the bid.