Oil giant, Occidental Petroleum, has reached a deal to sell Anadarko Petroleum’s oil and gas assets in Africa to French oil major Total for $8.8 billion, Occidental CEO Vicki Hollub announced on Sunday.
However, Occidental should first reach an agreement to buy Anadarko against rival Chevron, which is also competing to acquire Anadarko.
“Given our long history of working together productively, I am confident we can execute this sale quickly and efficiently,” Occidental CEO Vicki Hollub said in a statement. “Total has extensive experience working in Africa and is well positioned to maximize value from these assets.”
Occidental said to fund its cash-and-stock purchase of Anadarko, it would seek to sell from $10 billion to $15 billion worth of assets to underwrite the $38 billion proposed takeover.
Occidental said the sale of the Anadarko’s assets in Algeria, Ghana, Mozambique and South Africa to Total would also reduce the challenges of integrating the two drillers.
According to reports, the deal with Total is a binding agreement, and the divestment of the African assets would happen at the same time Occidental closes a deal to purchase Anadarko or shortly after.
The divestment would leave Occidental with Anadarko’s holdings in U.S. shale basins, the Gulf of Mexico and South America, as well as Western Midstream Partners, a fossil fuel transportation and processing company, according CNBC.
Occidental is said to be primarily interested in Anadarko’s acreage in the Permian Basin, which is the top U.S. shale field stretching from western Texas to southeastern New Mexico.
Chevron had earlier reached a deal to buy Anadarko for $33 billion last month, but Occidental later put in a higher offer. Anadarko’s board of directors is currently considering Occidental’s bid.
CNBC said the agreement with Total is Occidental’s latest effort to offer some certainty to investors about financing for the deal. Last week, the company revealed a $10 billion investment from Warren Buffett’s Berkshire Hathaway, which is also contingent on the Anadarko deal closing and would fund the cash portion of the bid, adding that Anadarko’s global footprint is widely seen by analysts as a better fit with Chevron’s portfolio, particularly the former’s Mozambique liquefied natural gas project.
Chevron is a major player in the market for LNG, or natural gas super-chilled to liquid form for transport.
The proceeds of the asset sales to Total would go towards funding the cash part of Occidental’s offer for Anadarko. The transaction is structured as a 50-50 cash-stock deal.