Oil and gas company Occidental Petroleum buys a competitor for $12 billion – Kommersant
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Today, December 11, the American oil and gas company Occidental Petroleum announced about buying its competitor CrownRock. Occidental will pay $12 billion for CrownRock, partly in cash and partly in its shares. To finance the deal, Occidental will borrow $9.1 billion and issue $1.7 billion in shares. Under the terms of the agreement, the buyer will assume CrownRock’s debt in the amount of $1.2 billion.
The transaction is expected to close in the first quarter of 2024. By purchasing CrownRock, Occidental will increase production in the Permian oil basin in Texas by 170 thousand barrels of oil equivalent per day – the company’s fields in this basin currently produce about 588 thousand barrels of oil equivalent per day.
This is not the first major deal in the American oil and gas market this year. In October ExxonMobil acquired another American company – Pioneer for $59.5 billion, and Chevron bought shale oil producer Hess for $53 billion. Experts predicted that after record profits of American oil and gas companies last year, a boom in mergers and acquisitions in the industry could be expected.
True, some investors may be wary of the news of CrownRock’s purchase. Recall that in 2019 Occidental for $55 billion bought oil company Anadarko. Soon after, the COVID-19 pandemic hit and oil prices plummeted, causing the deal to nearly send Occidental into bankruptcy. Since then, however, the company’s position has improved, ending last year with a record profit of $13.3 billion. However, its debts as of September were still $18.6 billion, and Occidental is now taking out new loans.
“CrownRock’s assets are considered high quality, but investors are likely to question the wisdom of additional leverage now,” said Peter McNally, a partner at research firm Third Bridge.
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