News Summary
Occidental Petroleum Corp announced on Monday that it is acquiring CrownRock L.P., an oil and gas producer based in Midland, Texas, for $12 billion. Occidental Petroleum stated that the deal will enhance its assets in the Midland area of the oil-rich Permian Basin. Occidental also raised its quarterly dividend to 22 cents per share from 18 cents.
Company Expansion in the Permian Basin
With a cost of $12 billion, the deal struck by Occidental Petroleum Corp to purchase CrownRock L.P. is essentially a step to expand the company in the Permian Basin and other oil-rich areas. Occidental clarified that the acquisition will complement and enhance its portfolio in the Permian Basin by adding approximately 170,000 barrels of oil equivalent per day from “high-margin unconventional production with low decline in 2024, in addition to around 1,700 undeveloped locations.” CrownRock L.P. is a joint venture between CrownQuest Operating LLC and Lime Rock Partners.
Strengthening Occidental’s Portfolio in the Permian Basin
The company’s CEO, Vicki Hollub, stated that adding CrownRock’s assets “adds to the strongest and most distinctive portfolio Occidental has ever had,” noting that it will help the company “build scale” in the Midland section of the Permian Basin. The deal is expected to close in the first quarter of next year.
Other Deals in the Oil Sector
Occidental’s move comes less than two months after two other significant deals in the oil sector: Exxon Mobil Corp’s acquisition of Pioneer Natural Resources for about $60 billion and Chevron Corp’s takeover of Hess Corp for $53 billion. In addition to acquiring CrownRock, Occidental announced a dividend increase of 4 cents to 22 cents per share. The company explained that this move is “consistent with its shareholder return priorities.”
Rise in Occidental Petroleum Shares
Shares of Occidental Petroleum, a favorite of renowned investor Warren Buffett, rose by about 0.2% to $56.56 by midday Monday following the news.
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