Occidental Petroleum
Jay L. Clendenin | Los Angeles Times | Getty Images
Occidental Petroleum has agreed to buy CrownRock, a major privately held energy producer that operates in the Permian Basin, for $12 billion.
The deal is latest in a spate of consolidation in the U.S .energy sector, particularly in the Permian, the largest oil-producing region in the U.S. The transaction is expected to close in the first quarter of 2024.
CrownRock is developing a 100,000-acre position in the Midland Basin, a portion of the Permian that spans 20 counties in western Texas. The Midland Basin produced 15% of U.S. crude in 2020, according to the U.S. Energy Information Agency.
Occidental will issue $9.1 billion in debt and about $1.7 billion in common stock to finance the transaction.
Separately, Occidental said it is raising its quarterly dividend to 22 cents a share from 18 cents a share beginning next year.
The transaction will add 170,000 barrels of oil equivalent per day to Occidental’s production as well as 1,700 undeveloped locations to the company’s operations in the Permian.
CrownRock is one of the last major private producers in the Permian alongside Endeavor Resources. The company is led Texas billionaire Timothy Dunn and backed by the Houston-based private equity firm Lime Rock Partners.
Occidental is the ninth largest energy company in the U.S. with a market capitalization of $49.7 billion. Warren Buffett’s Berkshire Hathaway owns about a 26% stake in the company. Occidental’s stock is down 10% this year.
The company’s last major acquisition was its purchase of Anadarko Petroleum for $55 billion in 2019. Occidental’s purchase of Anadarko sparked a bitter dispute with activist investor Carl Icahn, who sold the remainder of his stake in the company in 2022.
Occidental’s purchase of CrownRock is the third major deal in the energy sector in less than two months.
Exxon Mobil announced in October that it is acquiring Pioneer Natural Resources for about $60 billion. Pioneer is the largest producer in the Midland Basin, according to Enverus.
Weeks later, Chevron announced it had agreed to purchase Hess for $53 billion.
