Occidental Petroleum Corp. said Monday it would pay $12 billion for privately held Permian Basin oil and gas producer CrownRock LP, which is a joint venture of CrownQuest Operating LLC and Lime Rock Partners.
CrownRock had reportedly drawn bids from several oil and gas companies.
Occidental
OXY,
said the deal will add about $1 billion in cash flow in the first year based on $70 per barrel.
As part of the deal, Occidental said it would increase its quarterly common stock dividend by 4 cents a share to 22 cents a share beginning with its February 2024 declaration.
Occidental’s stock rose by 1% on Monday morning.
Chris Semenuk, portfolio manager of the Global Royalties ETF
ROYA,
said Occidental has been under pressure to counter Exxon Mobil Corp.’s
XOM,
$59.5 billion all-stock deal for Pioneer Natural Resources
PXD,
The Pioneer acquisition and the CrownRock transaction “highlight that the Texas Permian Basin oil assets are still valuable,” Semunuk said in an email to MarketWatch. “This should support the value of companies like Texas Pacific
TPL,
and PrairieSky
PREKF,
that collect royalty income from assets in the Permian Basin.”
The WSJ reported late last month that Occidental was in talks to pay more than $10 billion for CrownRock.
Occidental plans to finance the deal with $9.1 billion of new debt and issuing about $1.7 billion of common equity, while assuming $1.2 billion of existing CrownRock debt.
The deal is expected to close in the first quarter of 2024.
Mike Murphy contributed to this report.
