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Occidental Petroleum is in talks to sell its OxyChem division in a deal expected to be worth about $10bn that would carve out one of the world’s largest standalone petrochemicals units.
The Houston-based company, which is backed by Warren Buffett, has been steadily divesting assets in recent years in an effort to reduce its heavy debt load, which now stands at $24bn. Occidental is working with advisers on the sale process.
The divestment, which would be Occidental’s biggest to date, was likely to be announced in the coming weeks, two people familiar with the matter said, provided it does not hit any last-minute hurdles.
Occidental’s OxyChem division generated almost $5bn in revenues in the 12 months to the end of June. Occidental’s market capitalisation stood at nearly $47bn at Friday’s close.
The identity of the buyer could not immediately be established. It was possible that the sale could still fall apart, the people warned. Occidental did not immediately respond to requests for comment.
Occidental is grappling with a large debt burden, a legacy of its $55bn acquisition of Anadarko Petroleum Corporation in 2019 and its $13bn acquisition of shale oil producer CrownRock in 2023.
Occidental’s shares have performed poorly over the past 12 months — shedding almost 8 per cent to trade at $47.47 — as a result of falling oil prices and concerns about the company’s debt burden. Over the same period, the S&P 500 has increased in value by more than 15 per cent.
The company has reduced its debt by $7.5bn in the past year, helped by $4bn of divestments since the start of 2024. In August, Occidental announced the sale of four development assets in the Permian basin, the largest oil producing region in the US, to undisclosed parties.
It also announced the sale of gas pipeline and other infrastructure to Enterprise Products Partners, a Houston-based oil and gas company.
“We are extremely pleased with the progress of our divestiture programme and the trajectory of our debt reduction plans,” chief executive Vicki Hollub said on an earnings call last month.
The US shale oil industry is tightening its belt following a 15 per cent fall in oil prices this year. At the beginning of this month, ConocoPhillips said it would cut up to a quarter of its workforce, and in February Chevron announced job cuts of up to 20 per cent.
Petrochemical producers’ margins have been squeezed by a supply glut in recent years, with new capacity coming on stream in the US and Middle East, and China building up its own domestic supply.
In July, the Boston Consulting Group published a report highlighting that “the consolidation trend is quickly gaining steam” in the petrochemical industry, with more than 300 deals announced in 2024.
