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Occidental talks for Middle East stake sale said to falter

DINESH NAIR and JEFFREY MCCRACKEN

HOUSTON (Bloomberg) -- Occidental Petroleum Corp.’s effort to raise as much as $8 billion by selling a stake in its Middle Eastern business has ended without a deal, people with knowledge of the matter said, and the company is now seeking to shop smaller pieces.

Occidental had been trying to sell 40% of the operations to a group comprising the governments of Oman, Abu Dhabi and Qatar, people have said, to raise cash for drilling and share buybacks.

The company now plans to sell some assets piecemeal, which will likely yield smaller proceeds than originally envisioned, two of the people said, asking not to be identified as the information is private. Occidental may fetch as much as $1 billion for smaller, partial sales, one of the people said.

The Middle East sale is part of a breakup plan unveiled more than a year ago that’s aimed at boosting Occidental’s share price. CEO Stephen Chazen handled talks with sovereign wealth funds and possible strategic partners for the minority stake himself, people said in September.

Mubadala, Oman

Abu Dhabi’s Mubadala Development Co. and Oman Oil were seeking to buy the stake, people with knowledge of the matter had said. The group initially also included Qatar Petroleum, though that company dropped out amid a political rift between the gas-rich state and its neighbors.

While Qatar had considered bidding for the 40% stake on its own, all three bidders now have walked away from the group, the people said.

“We continue to make progress on our discussions with our partners in the Middle East for the sale of a portion of our interests in the region,” Melissa Schoeb, a spokeswoman for Occidental, said in an emailed statement.

Representatives for Mubadala, Qatar Petroleum and Oman Oil couldn’t immediately be reached outside of regular business hours.

Occidental’s shares gained about 20% through yesterday, July 1, since April 25, 2013, when the company said it would consider a breakup. They fell 1% to $101.76 as of 3:09 p.m. in New York, after dropping as much as 1.5%

The Middle East accounts for more than a third of Occidental’s worldwide oil and gas production with developed and undeveloped assets of more than 5 million acres, according to information on the oil producer’s website. Occidental holds a 40% interest in Al Hosn Gas Project in the United Arab Emirates, one of the largest natural gas fields in the region. It also holds a stake in the Dolphin Energy gas project.

Citigroup Inc.’s role as the sole adviser to the Gulf-based consortium ended after the talks stalled, the people said. The U.S. bank may end up advising one of the interested parties in a revamped sale, the people said.

A spokesman for Citigroup declined to comment.

07/02/2014

 

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