NEW YORK — Occidental Petroleum Corp. said Friday it will sell its operation in Argentina while focusing more on U.S.-based oil and gas fields in separate deals worth billions of dollars.
The Los Angeles company said it will buy several assets in the U.S. from Royal Dutch Shell and a private owner for a combined $3.2 billion.
Shell's south Texas fields are worth about $1.8 billion. They currently produce about 200 million cubic feet per day of gas equivalent. Occidental also will buy from a private seller about 180,000 acres in North Dakota for $1.4 billion. Those fields produce about 5,500 barrels of oil equivalent per day.
Meanwhile, Occidental said it would sell its oil and gas operations in Argentina for $2.5 billion to Sinopec Group, China's biggest oil refiner. Sinopec, a subsidiary of China Petrochemical Corp., will be making its first venture in Argentina with the purchase. The state-owned company said it wants to diversify its oil and gas producing assets to reduce surging costs from importing crude oil for refining.
All of the deals should be completed within the first three months of 2011, Occidental said.
Ray Irani, Occidental chairman and CEO, said the company should be able to continue to increase production by 5 to 8 percent per year, even after the sale of its Argentina assets.
"We expect that each of these new acquisitions together with future drilling, potential exploration and consolidation opportunities in these areas, over time, will grow to over 50,000 barrels of oil equivalent per day," Irani said in a statement.
Argus Research analyst Phil Weiss said the Argentina government's influence over its gas prices may have helped push Occidental out of the country. It also makes sense that Occidental would be interested in land-based fields in the U.S., including areas where Shell has been drilling since 1953, Weiss said.
The company has been especially adept at coaxing more oil and gas from mature fields, and it'll likely be able to increase production in south Texas, Weiss said.
"When we look at this five to 10 years from now, my guess is that Oxy got a lot more production out of it than what we're seeing today," Weiss said.
Shanghai-based Sinopec is the biggest petroleum and petrochemicals company in China. It has made a number of deals recently to extend its reach around the globe.
In June, the company bought ConocoPhillips' stake in a Canadian oil sands project for $4.65 billion. Sinopec also stepped up its activities in South America this year, forming an alliance in Brazil with the Spanish energy company Repsol to create a $17.8 billion private energy group.
Sinopec currently is involved in operations in 20 countries.
Elsewhere, Occidental said it will increase its stake in pipeline operator Plains All-American from 22 percent to 35 percent and will buy the remaining stake in the Elk Hills Power Plant to become its full owner. Occidental said it would use both cash and debt to pay for the purchases.
Occidental also said it will boost its dividend 21 percent to 46 cents per quarter starting in April.
Occidental shares added $1.48, or 2 percent, to $92.55 and Shell's Class A shares added 37 cents to $64.66 per share in morning trading.