Occidental Petroleum acquires CrownRock in $12bn deal
In a major move in the oil and gas industry, Occidental Petroleum has agreed to acquire CrownRock, one of the most sought-after US private shale oil producers, in a deal valued at about $12bn, including debt.
The Houston-based company backed by Warren Buffett beat competition from rival bidders that had also tried to snap up CrownRock’s shale assets.
This deal is the latest in a series of transactions in the oil and gas sector as large energy companies seek to capitalize on their strong balance sheets and equity value to buy smaller rival assets.
Occidental’s most recent major transaction was criticized for being poorly timed after it took on huge debt to buy Anadarko Petroleum for $57bn in 2019, just before the Covid-19 pandemic caused oil prices to plunge to near zero. However, a rebound in oil prices has enabled Oxy to pay down debt and driven a surge in its share price.
Oxy said it would fund the CrownRock acquisition with a combination of cash and shares and intended to take on $9.1bn of new debt.
A successful takeover of CrownRock would cement Oxy’s position as the second-largest player in the prolific Permian Basin in the US southwest, where it produced 968,000 barrels of oil equivalent a day in August, according to consultancy Rystad Energy. Occidental’s stock price has risen almost 500 per cent since hitting a 20-year low during the oil market upheaval of 2020.