DISPOSITION / Occidental Petroleum to Sell Midcon To KN Energy
LOS ANGELES, Dec. 18 /CNW/ -- Occidental Petroleum Corporation
announced (NYSE: OXY) today that it has signed a definitive agreement to sell
its MidCon natural gas transmission and marketing subsidiary to KN Energy for
$3.49 billion in cash. KN Energy also will assume approximately $500 million
in liabilities, putting the total value of the transaction at approximately
$4 billion.
After taxes and other expenses, the transaction will net Occidental
approximately $3.1 billion in cash. Also, KN Energy will pay Occidental an
average of $30 million a year for the next 29 years for a lease of the MidCon
Texas Pipeline.
The transaction is expected to close in first quarter 1998, pending
regulatory approvals.
As a result of the transaction, in the fourth quarter Occidental will
classify MidCon as a discontinued operation and take a charge of approximately
$750 million.
Dr. Ray R. Irani, chairman and chief executive officer of Occidental,
said, "This sale is a key step in the transformation of Occidental into a
simpler and more profitable company. We will use the proceeds from this
transaction to partially fund the recently announced acquisition of the one-
billion-barrel Elk Hills field."
After the sale, Occidental will be focused on two worldwide businesses
-- oil and gas exploration and production and chemicals. By mid-1998,
approximately 60 percent of Occidental's assets will be in oil and gas, and
40 percent will be in chemicals.
Merrill Lynch and Credit Suisse First Boston advised Occidental on the
sale.
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