Occidental Petroleum Inks $1.1B Acquisition Deal To Accelerate Net-Zero Strategy

Occidental Petroleum Corp OXY inked a definitive deal to acquire all the outstanding equity of Carbon Engineering Ltd. for around $1.1 billion.

The company will make three equivalent annual payments, with the first to be done at closing.

This transaction is expected to close by 2023, subject to Canadian court reviews, Canadian and U.S. regulatory approvals, and other customary closing conditions.

After the deal closure, Carbon Engineering would become a wholly owned subsidiary of Oxy Low Carbon Ventures. 

Occidental has collaborated with Carbon Engineering for direct air capture (DAC) deployment since 2019, and the buyout is in line with its integrated net-zero strategy.

The acquisition offers Occidental, through its 1PointFive subsidiary, an opportunity to accelerate advanced DAC technology breakthroughs and deployment of DAC as an efficient global carbon removal solution. 

Notably, 1PointFive is creating the world's largest DAC plant in Texas, Stratos, expected to be commercially operational in mid-2025. 

Related: Occidental Subsidiary 1PointFive Bags US DoE Grant To Develop South Texas Direct Air Capture Hub

"We expect the acquisition of Carbon Engineering to deliver our shareholders value through an improved drive for technology innovation and accelerated DAC cost reductions. The technology partnership also adds new revenue streams in the form of technology licensing and royalties," said Vicki Hollub, Occidental President and CEO. 

"Importantly, the acquisition enables Occidental to catalyze broader development partnerships for DAC deployment in the most capital efficient and valuable way," she added.

Earlier this month, OXY reported quarterly EPS of $0.68, which missed the analyst consensus estimate of $0.72, and sales of $6.73 billion, which beat the analyst consensus estimate of $6.69 billion.

As of June 30, 2023, cash and cash equivalents stood at $486 million. 

Price Action: OXY shares are trading higher by 0.05% at $63.60 in Wednesday's premarket session.

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