Occidental Subsidiary to Redeem $610M in WES Units for Revised Midstream Contracts

summarizeSummary

Occidental Petroleum's subsidiary, Western Gas Resources, Inc., will redeem 15.3 million common units of Western Midstream Partners, LP, valued at $610 million, as consideration for new and amended midstream agreements.

check_boxKey Events

• Unit Redemption Agreement

  Western Gas Resources, Inc., a subsidiary of Occidental Petroleum, will transfer 15,307,402 common units of Western Midstream Partners, LP to the Issuer for redemption and cancellation.

• Transaction Value

  The units to be redeemed are valued at $610.0 million as of the agreement date.

• Strategic Consideration

  The unit redemption is in exchange for amendments to existing gas gathering and processing contracts, including minimum volume commitments and a fixed-fee rate structure, and a new midstream agreement.

• Ownership Reduction

  Occidental's beneficial ownership in WES will decrease from 40.6% to approximately 36.86% after the redemption.

auto_awesomeAnalysis

This Schedule 13D/A filing details a significant strategic transaction where Occidental Petroleum, through its subsidiary, will surrender a substantial block of Western Midstream Partners units back to the company for cancellation. This unit redemption, valued at $610 million, serves as consideration for new and amended gas gathering and processing contracts in the Delaware Basin. The transaction is mutually beneficial, providing WES with a reduction in outstanding units (which is accretive to per-unit metrics) and securing long-term volume commitments and a fixed-fee rate structure for its midstream assets. For Occidental, it optimizes its midstream service agreements while reducing its ownership stake in WES.