Occidental Acquires Permian Producer

You can almost hear DJ Khalid echo “anotha one” as Permian basin deals keep popping up throughout 2023.

What happened: Occidental Petroleum (Oxy) is acquiring private US shale oil producer CrownRock in a $12 billion cash-and-stock deal. Oxy joins the Permian mergers and acquisitions club alongside ExxonMobil, Chevron, Civitas, and more who all recently made significant deals in the basin.

• The Permian, a prolific oil and gas basin in Texas, has seen of over $100 billion in M&A this year, per Wood Mac.

The deets: Oxy is already one of the biggest producers in the Permian. With CrownRock, the company will add 170,000 barrels of oil equivalent per day to make it the second largest producer in the basin.

• In terms of position, the deal will put it ahead of Chevron + Hess but still behind Exxon and its acquisition of Pioneer.

The production comes at a cost

The new deal will be primarily funded with $10 billion in debt, increasing Oxy’s total debt to around $28 billion.

• Back in 2019, Oxy made a $57-billion acquisition of Anadarko that nearly sunk the company in debt before higher prices in recent years helped to dig them out.

There are understandably some who view the new deal with mixed emotions. To keep afloat, Oxy intends to reduce its debt through asset sales and cash flow.

Zoom out: Inorganic growth, adding oil and gas production by acquiring another company, continues to be the path chosen by many companies this year.

Based on the what we’ve seen for deals in the Permian in 2023, we’d venture to say we’ll be seeing anotha one soon.