Occidental Petroleum (OXY) is selling its Argentine oil and gas operations to a China Petrochemical subsidiary for about $2.5 billion, allowing it to purchase new properties in the U.S. and increase its quarterly dividend. 

The Los Angeles-based oil and gas company has inked deals to purchase oil and gas properties in South Texas and North Dakota for about $3.2 billion

Its South Texas properties, totaling some 200 million cubic feet per day of gas equivalent, will be purchased from long-time holder Shell for about $1.8 billion, while its North Dakota purchase will include 180,000 net contiguous acres, with some 5,500 billion oil equivalent per day, from a private seller for about $1.4 billion. 

The US gas company has also signed an agreement to increase its general partner ownership in Plains All-American (PAA) to 35%, while at the same time acquiring the remaining 50% stake from Sempra Energy (SRE) in the Elk Hills Power Plant.

Pending regulatory approvals, Occidental said it expects all transactions to be completed no later the end of the fiscal 2011 first-quarter.

“These transactions will be immediately accretive to our earnings, return on capital employed and cash flow after capital,” said Occidental CEO Dr. Ray R. Irani. “With these new acquisitions and without Argentina in our asset mix, achieving both our short-term and long-term average annual production growth outlook of 5% to 8% will be more certain and will generate higher returns.”

In light of the company’s strong outlook from the acquisitions and divestitures, its board has agreed to increase its dividend to 46 cents, up about 21% from 38 cents.

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