Occidental Petroleum to acquire CrownRock LP in $12 bn deal

US oil company Occidental Petroleum on Monday said it has entered into an agreement to acquire Midland-based oil and gas producer CrownRock L P, for cash and stock in a transaction valued at approximately $12.0 billion, including the assumption of CrownRock’s debt.

CrownRock L P, a joint venture of CrownQuest Operating LLC and Lime Rock Partners, owns over 94,000 net acres of premium stacked pay assets and supporting infrastructure.

Houston-based Occidental said these assets are contiguous to its legacy Midland Basin portfolio and compliments it with the addition of nearly 170 thousand barrels of oil equivalent per day (Mboed) 

The addition of high-margin, lower-decline unconventional production, as well as approximately 1,700 undeveloped locations is expected to bring in $1 billion in the first year itself (based on WTI price of $70 per barrel), it added.

The acquisition of CrownRock’s assets increases Occidental’s Permian unconventional sub-$40 breakeven inventory by 33 per cent, according to the company.

Occidental announced plans for a new $4.5-$6.0 billion divestiture programme to reduce its debt by at least $4.5 billion within 12 months

Occidental also announced its intention to increase the quarterly common stock dividend per share by $0.04 to $0.22, beginning with the February 2024 declaration.

Occidental plans to finance the acquisition with $9.1 billion of new debt and issuance of approximately $1.7 billion of common equity and the assumption of CrownRock’s $1.2 billion of existing debt.

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