October 7, 2014 / 10:01 PM / in 5 years

Oxy sale of Bakken assets would make strategic sense -analysts

Oct 7 (Reuters) - Any sale of Occidental Petroleum Corp’s roughly 330,000 acres in North Dakota’s oil-rich Bakken shale formation would make strategic sense for the company, which is likely eager to strike a deal, two analysts said on Tuesday.

Oxy is looking to sell its Bakken holdings, which are largely undeveloped, for as much as $3 billion, according to a report from Bloomberg News.

Even with the recent dip in crude oil prices, the divestment “makes sense to us, strategically,” Raymond James analysts Pavel Molchanov and Kevin Smith said in a note to clients on Tuesday.

“This is substantially undeveloped acreage, and Occidental has long cited it as a likely monetization candidate, so it’s been puzzling why the company kept it this long,” the analysts said.

Oxy is spending about $510 million this year on its North Dakota holdings, and any buyer would have to invest significant capital to boost production. Currently, Oxy is the 18th-largest oil producer in North Dakota with about 17,000 barrels per day as of July, trailing peers of the same size and even much-smaller rivals.

Oxy said last October that it would pursue “strategic alternatives” for some of its North American assets, including those in North Dakota. In a statement to Reuters on Tuesday, the company reiterated that position.

Oxy shares fell 2.3 percent on Tuesday to close at $94.87. (Reporting by Ernest Scheyder. Editing by Andre Grenon)

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