first_imgUnder the deal, the companies agreed to form a strategic partnership to develop unconventional reservoirs in nearly 97,000 acres of the Permian Basin in Texas Image: The JV should add roughly 160 million barrels of oil-equivalent (Mmboe) to Ecopetrol’s proven reserves by the end of 2019. Photo: courtesy of skeeze/Pixabay. Colombia’s state-run oil company Ecopetrol has closed its joint venture deal with Occidental Petroleum for the development of Permian Basin acreage.Under the deal, the companies agreed to form a strategic partnership to develop unconventional reservoirs in nearly 97,000 acres in the Permian Basin in Texas.For the development of the acreage, Ecopetrol Permian, 100% owned by Ecopetro has acquired a 49% stake in Rodeo Midland Basin, with Occidental maintaining its 51% ownership.Under the joint venture, Rodeo Midland Basin’s economic activity will be directed towards the execution of the joint development plan.Ecopetrol has made an initial payment of approximately 876.5m for the dealThe Colombian company paid an initial payment of around $876.5m, which is about half of the total transaction value for the acquisition and completion of the deal. It initial payment includes nearly $750m for the transaction itself and about $126.5m in estimated expenditures of the development plan for 2019.Occidental president and CEO Vicki Hollub said: “We are highly confident that the actions we already have in progress will allow us to exceed the upper end of our original $10 to $15 billion divestiture goal by the middle of 2020.“Closing the Midland Basin Joint Venture and completing the sale of additional non-core assets are the latest examples of Occidental’s progress towards further strengthening our balance sheet.”The project currently has two rigs in operation. Two wells have been drilled and are in completion, with the first production expected by the end of this year. The companies plan to operate four rigs by the end of 2020.The companies said that: “The transaction is aligned with Ecopetrol’s strategic priorities outlined in the 2019-2021 business plan, which are focused on reserves and production growth under strict capital discipline, supported by exploration activities, enhanced oil recovery, unconventional resources and the internationalization of operations.“It also strengthens Ecopetrol’s relationship with a respected, strategic partner, highly experienced in the development of unconventional resources.”last_img read more