Wyoming Preps Bid for Occidental Properties
The State of Wyoming will soon be submitting a bid in attempt to achieve the largest government purchase of private land since the United States purchased Alaska.
After vetoing a bill laying out the process for legislative oversight of the proposed land deal in late March, Wyoming Governor Mark Gordon has continued forward in exploring the deal, and in an interview Tuesday, state officials confirmed that a bid will soon be submitted.
The proposed purchase includes 1 million acres of private land and 4 million acres of mineral rights along the Union Pacific Railroad corridor in southwestern Wyoming. Known as the Anadarko holdings, the land is owned by Occidental Petroleum Corp. The properties are interspersed with lands administered by the Bureau of Land Management in what is known as Wyoming’s checkerboard. The assets involved include trona, coal and mining, oil and gas, and the surface itself. The deal also includes mineral rights and lands in Utah and Colorado.
Price & Advisors:
There have been no details released about the potential price tag for the deal, but legislators used a hypothetical purchase price of $1.2 billion, and it has been represented that the lands involved currently provide an annual revenue stream of $130-150 million.
Governor Gordon is continuing to pursue the deal amid the drastic decline in Wyoming’s forecasted revenues and global economic downturn due to the current public health pandemic. In an interview Tuesday, Gordon’s Chief Energy Advisor Randall Luthi and Communications Director Michael Pearlman emphasized that Gordon’s position is that this deal is being investigated as an investment opportunity, and the investment would have to provide a rate of return that would benefit the State of Wyoming and its citizens.
Gordon has used an informal group of volunteer advisors with experience in similar transactions to provide input on the deal. As a result of their input, the State entered a contract with Barclays (a multinational investment bank) to assess the assets involved in the proposed purchase. In his rejection of legislation in March, Gordon expressed frustration that the legislature had not included funding to pay for the cost of conducting due diligence on the proposal. Since then, Gordon has used existing state funding mechanisms to enter into a contract with Barclays, which was signed by the director of the Office of State Lands. The details of that contract are protected from disclosure under attorney-client privilege, according to Luthi. He said there will be “post-reporting” on how much the State has spent on exploring the land deal at some point in the future.
Luthi confirmed that there are other bidders vying for the opportunity to purchase the Occidental assets. “At this point in the negotiations, there are other bidders out there,” Luthi said. “We don’t know who they are,” but suggested that some are trona and energy development companies.
The timeline for acceptance or rejection of Wyoming’s bid for the Occidental assets is unknown. It Wyoming’s bid is accepted, then the governor will report to the Wyoming Legislature and begin releasing information to the public. In March, Gordon had pledged: “Should an agreement in principle be reached, the Legislature will have the opportunity to review. It is the Legislature’s role to decide whether and how to fund a potential purchase based on the Agreement in Principle.”
Wyoming’s bid may be straightforward in that it proposes the purchase be funded through various state accounts. Another option is that Wyoming may submit a bid based on thus far undisclosed agreements with partners for portions of those assets. When asked whether this “partner” option is a possibility, Luthi said all options are on the table. When asked specifically if Wyoming’s plan included proposed partnerships for the Occidental assets, Luthi said, “It may very well, it may not.”
During the legislative session earlier this year, Luthi had pointed out the importance of a provision in the draft legislation that would have allowed the state to receive gifts or donations toward the land purchase, while noting that such gifts may have “some strings attached to them” that would have to be considered.
Although there have been informal discussions, the governor has not yet requested a written Attorney General’s opinion on the legality of the land deal at this time, the state officials said.
Communications Director Pearlman emphasized that the governor’s overriding priority has been to examine this potential purchase for its investment potential, and whether the assets could be rolled into the state’s current portfolio. “It’s not specifically about the type of investment, whether it be oil and gas, or trona,” Pearlman said. “It’s specifically on whether this total portfolio, including the land, would make sense from an investment perspective.”
Read more at Frequency asked questions about the deal, prepared by the Office of the Governor.