M&A
December 11, 2023
3 minutes read

Occidental To Buy Texas Oil Driller CrownRock For $12B

Occidental Petroleum (NYSE: OXY), an American oil and gas giant, has struck a deal to buy CrownRock, a privately held…

Occidental Petroleum (NYSE: OXY), an American oil and gas giant, has struck a deal to buy CrownRock, a privately held oil and gas producer with assets primarily in the Permian Basin.

Occidental will pay $9.1bn in cash and $1.7bn in shares, summing up to a $10.8bn payout for CrownRock shareholders. The oil giant will also assume $1.2bn of CrownRock’s existing debt, placing the deal’s value at $12bn.

CrownRock is a joint venture between private equity firm Lime Rock Partners and Tim Dunn, a low-profile Texan oil mogul. The Dunn family holds a roughly 20% stake, and Lime Rock Partners controls the rest.

Occidental’s acquisition is the latest addition to a recent wave of mergers & acquisitions in the oil and gas sector amid high prices and lucrative profits for industry bigwigs. In October, ExxonMobil agreed to buy shale gas rival Pioneer for $60bn. That same month, Chevron agreed to acquire publicly-traded rival Hess Corporation for $53bn.

Oil and gas producers are reaping massive profits amid high prices, even as governments increasingly sour on fossil fuels in favor of renewable energy sources. Increasing government opposition means less room for industry incumbents to explore and drill new fields on U.S. soil. The alternative is to acquire other companies with prized assets to drive growth.

Acquiring CrownRock will add 170 thousand barrels of oil equivalent per day (MBOED) of energy production to Occidental’s operations, the company said in a statement. CrownRock also has 1,700 undeveloped locations in the Permian Basin that could contain more oil and gas reserves, Occidental said.

Occidental will fund the $9.1bn cash payout by issuing new debt. It’ll also issue $1.7bn in new shares for CrownRock shareholders.

Occidental’s debt profile will rise to $28bn once the deal closes. The oil giant said it plans to sell $4.5bn-$6bn in non-core assets to pay down debt within 12 months. Its shares rose nearly 1% on Monday, closing the day with a $50bn market value.