Occidental to Acquire Altura Oil Venture

Occidental Petroleum Corp. will buy Altura Energy Ltd., the onshore U.S. oil-exploration joint venture of BP Amoco and Shell Oil Co., for more than $3.5 billion, people familiar with the transaction said Friday.

BP Amoco owns 64% of Altura, and Shell holds the rest. Both partners said in September they were in talks to sell the unit. Occidental, BP Amoco and Shell declined to comment.

Altura is the largest oil and natural-gas producer in the Permian Basin of West Texas and eastern New Mexico. BP Amoco and Shell want to invest in finding large, new reservoirs in promising areas such as the deep waters of the Gulf of Mexico, analysts say. Westwood-based Occidental has been buying large fields in the U.S. that are already producing oil.

“It certainly fits the pattern of Occidental’s strategy of recent years, which is to buy production,” said Eugene Nowak, an analyst at ABN Amro Inc.

BP Amoco, the world’s third-largest publicly owned oil company, and Shell, the U.S. arm of the Royal Dutch/Shell Group, have far more resources than Occidental. Occidental has one-twelfth the revenue of Shell.

Returns from Altura’s fields are no longer high enough to be attractive to BP Amoco and Shell. Adding Altura would significantly increase the production levels of a smaller company such as Occidental.

Last year, Altura produced 110,000 barrels of oil, 125 million cubic feet of natural gas and 18,000 barrels of natural-gas liquids a day from more than 6,400 wells. The partnership employed 800 people.

Houston-based Altura was formed in March 1997 when Amoco Corp. and Shell combined their Permian oil and gas operations. British Petroleum Co. bought Amoco for $62 billion in 1998.

Occidental shares fell 44 cents to close at $18.50 on the New York Stock Exchange, and BP Amoco’s American depositary receipts fell $1.50 to close at $46.63.