Following Withdrawn Bid, Gov. Gordon Statement Gives Answers Behind Oxy Deal

Aug 20, 2020

Credit State of Wyoming

Gov. Mark Gordon released a statement following a press release providing answers to some long-held questions regarding the state's bid for Occidental Petroleum's 4.5 million acres of mineral rights and one million acres of surface land.

It came as Occidental entered a purchase and sale agreement with the investment management firm Orion Mine Finance. Subsequently, Wyoming withdrew its bid.

Some of the long-held questions arose on July 7, when the State Loan and Investment Board (SLIB) heard from the public for the first time since the legislative session discussion regarding the potential land purchase. The extent of questions surrounded the potential cost of the deal, whether the purchase would bring economic diversification, the role of the investment bank Barclays and particularly transparency with the public.

Citizen Brenda Mongold said at the time that the secrecy of the deal led to an erosion of public trust. Former attorney Larry Wolfe agreed saying it was difficult to even comment on the deal without much info available.

"We've been rightly critical that over those five months that you collectively have dissembled, misdirected, stonewalled, and hidden what you're doing," he said back in July.

Following public comment, Jillian Balow, SLIB member and state superintendent of public instruction, asked what information would become public after the bid process.

"When we get to that purchase [and] sale agreement, it's fully expected that the report that we've agreed to supply to the public should be relatively soon after that. I mean, we have most of the information," said Randall Luthi, the governor's chief energy advisor. "But I would suspect that purchase price would be the worst kept secret since the dawn of man."

In his statement, Gordon brought up the point of transparency saying communication between the branches has been constant and consistent and that there had been strong support from the legislative and state-wide elected leaders.

"Moreover, there was never any doubt that any decision to pursue the sale would be fully and publicly disclosed," the statement read. "Moving forward as the SLIB did was not a way to short circuit any of these considerations."

Occidental assets broken down by county in Wyoming
Credit Governor's Office

After much speculation, the governor's statement revealed SLIB authorized a bid starting at $1.05 billion for all of Occidental assets and $225 million without the trona assets. Later on, Treasurer Curt Meier and Gordon raised that bid to $1.2 billion, which was slightly below the highest authorized range.

Orion Mine Finance won the bid at $1.33 billion.

The statement also shed light on some of the considerations going into the bid itself. Gordon had said in several speeches, meetings and statements that any offer would be based only on the lands' investment potential for the state. The state's review suggested a rate of return between 8 and 12 percent depending on the speed of economic recovery.

That did not include anticipated tax revenue from wind or solar given it would have been too speculative. It did consider added management costs and possible environmental liabilities. It did not include consideration of potential resale value of any of the assets.

The statement addressed the state's pursuit of an investment bank as well. State officials spoke with Jeffries, Citi Bank, Tudor Pickering, Holt, and Barclays. For a set fee of $2.5 million, Wyoming agreed Barclays would analyze the asset with "additional consideration should our purchase be successful."

The bank provided state leaders with that analysis and a range of returns, but its recommendations were not unanimous.

Treasurer Meier said the purchase would have been a good investment, but that exceeding the target bid was not a risk state was willing to take.

"This was a once in a generation opportunity. It is very different for a State to be involved in a sale of private assets of this magnitude and Oxy should be thanked for establishing an approach that allowed for Wyoming to participate," the statement read.

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