Occidental to Buy Permian Oil Producer CrownRock in $12-Billion Deal

Occidental Petroleum will buy Permian oil and gas producer CrownRock for cash and stock in a deal valued at around $12 billion, including debt, Oxy said on Monday announcing the latest large acquisition in the U.S. oil industry.

Reports of a potential Occidental- CrownRock transaction emerged at the end of last month when the Wall Street Journal reported that a deal would be valued at more than $10 billion including debt.

Occidental confirmed those reports today with the news that it has entered into a purchase agreement to buy CrownRock, whose over 94,000 net acres of premium stacked pay assets and supporting infrastructure “are well positioned alongside Occidental’s legacy Midland Basin business.”  

The acquisition will boost Occidental’s premier Permian portfolio with the addition of around 170,000 barrels of oil equivalent per day (boed) of high-margin, lower-decline unconventional production in 2024, as well as approximately 1,700 undeveloped locations.

It’s also expected to deliver increased free cash flow on a diluted share basis, including $1 billion in the first year based on $70 per barrel WTI price.

The transaction is expected to close in the first quarter of 2024, subject to customary closing conditions and the receipt of regulatory approvals.

Occidental also announced on Monday its intention to raise its quarterly common stock dividend per share by $0.04 to $0.22, beginning with the February 2024 declaration, consistent with the company’s shareholder return priorities.

“We found CrownRock to be a strategic fit, giving us the opportunity to build scale in the Midland Basin and positioning us to drive value creation for our shareholders with immediate free cash flow accretion,” Occidental President and CEO Vicki Hollub said.  

Occidental announced a third major acquisition in the U.S. oil industry after Exxon announced a deal to buy Pioneer Natural Resources in an all-stock transaction valued at $59.5 billion, and Chevron said it would buy Hess Corporation in an all-stock transaction valued at $53 billion with a total enterprise value, including debt, at $60 billion.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

• India to Boost Oil Refining Capacity by 1 Million Bpd a Year Until 2028
• Chinese Demand for Saudi Crude Slumps to 5-Month Low
• Oil Prices Continue to Climb on SPR Refill News