US independent Occidental Petroleum expects to take a $1.7 billion impairment charge in the fourth quarter, with a majority of the charge coming from the sale of its stake in Western Midstream Partners along with costs from its acquisition of Anadarko Petroleum.

According to a Tuesday filing with the Securities and Exchange Commission, Occidental will write down a $1 billion charge related to the sale of its stake in Western Midstream. The midstream segment was an affiliate of predecessor Anadarko.

Additionally, Occidental will write off $655 million related to the $38 billion acquisition of Anadarko that closed last August, which includes severance and integration costs.

That charge will be partially offset by a positive $475 million charge stemming from a joint venture with Colombia’s state-run oil company Ecopetrol in the prolific Permian basin.

The $750 million Midland sub-basin JV agreement saw Ecopetrol debut in the area, where the Latin American company aims to learn more about shale production and hydraulic fracturing by developing 97,000 net acres. Ecopetrol plans to run four rigs in the area in 2020.

Occidental’s fourth quarter production from continuing operations is expected at 1.4 million barrels of oil equivalent per day, with the Permian contributing about 476,000 boepd.

Quarterly production is expected to exceed guidance of 1.31 million bpd to 1.34 million bpd. Occidental attributed the increase to reduced downtime, improved time to market, and a strong base and new well performance.

For 2020, the company anticipates annual production to grow by 2%, even as Occidental has lowered its full-year capital budget by about $100 million to $5.2 billion to $5.4 billion.

Occidental is scheduled to release its fourth-quarter and full-year results on 27 February.

Finance

Occidental hit with $1.7bn impairment in fourth quarter