Occidental Gears Up For Growth: Acquires CrownRock For $12B, Expanding Permian Basin Presence

Occidental Petroleum Corp OXY has entered into a purchase agreement to acquire Midland-based oil and gas producer CrownRock L.P. for cash and stock in a transaction valued at about $12.0 billion, including assumption of debt.

CrownRock L.P. is a joint venture of CrownQuest Operating LLC and Lime Rock Partners. CrownRock's over 94,000 net acres of stacked pay assets and supporting infrastructure amplify the company's Midland Basin business.

The acquisition is expected to complement and enhance Occidental's Permian portfolio by adding about 170 thousand barrels of oil equivalent per day (Mboed) of high-margin, lower-decline unconventional production in 2024.

Related: Occidental Eyes Major Permian Basin Expansion With Potential $10B CrownRock Acquisition: Report

Occidental intends to finance the deal with the incurrence of $9.1 billion of new debt, the issuance of about $1.7 billion of common equity, and the assumption of CrownRock's $1.2 billion of existing debt. 

The deal is 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.

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

"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," said Occidental President and CEO Vicki Hollub.

Occidental held $649 million in cash and equivalents as of September 2023.

The company also said it will increase the quarterly common stock dividend per share by $0.04 to $0.22, beginning with the February 2024 declaration.

Price Action: OXY shares are trading lower by 0.58% at $56.14 in premarket on the last check Monday.

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