Occidental Gears Up For Growth: Acquires CrownRock For $12B, Expanding Permian Basin Presence
Portfolio Pulse from Shivani Kumaresan
Occidental Petroleum Corp (NYSE:OXY) is acquiring CrownRock L.P. for $12 billion, including debt assumption, to expand its presence in the Permian Basin. The deal adds 94,000 net acres and is expected to increase production by 170 Mboed in 2024. Occidental plans to finance the acquisition with $9.1 billion in new debt, $1.7 billion in common equity, and assuming $1.2 billion of CrownRock's debt. The acquisition is anticipated to increase free cash flow per diluted share, with $1 billion expected in the first year at $70 per barrel WTI. The transaction should close in Q1 2024, and Occidental will also raise its quarterly dividend to $0.22 starting February 2024. OXY shares dropped 0.58% in premarket trading.
December 11, 2023 | 1:40 pm
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Occidental Petroleum is set to acquire CrownRock, enhancing its Permian Basin footprint and expecting to increase production and free cash flow. The deal involves significant financing and a dividend increase, with a slight premarket stock price drop.
The acquisition is a strategic move for Occidental, likely to result in long-term growth, but the financing through debt and equity issuance may concern investors about potential dilution and increased leverage. The dividend increase is positive, but the premarket stock dip indicates mixed immediate reactions.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100