Occidental Petroleum Corporation (NYSE:OXY) announced on Monday an agreement to acquire privately held energy producer CrownRock LP, which operates in the Permian Basin, in a cash-and-stock transaction valued at about $12.0 billion, including the assumption of CrownRock’s debt.
Occidental said the transaction will add 170,000 barrels of oil equivalent per day to its production as well as 1,700 undeveloped locations to its operations in the Permian.
"We found CrownRock to be a strategic fit, giving us the opportunity to build scale in the Midland Basin and positioning us to drive value creation for our shareholders with immediate free cash flow accretion," Occidental Petroleum CEO Vicki Hollub said in a statement.
Occidental noted that it expects the transaction will increase its free cash flow on a diluted share basis by $1 billion in the first year based on a West Texas Intermediate (WTI) oil price of $70 per barrel.
The company added that it will issue $9.1 billion in debt and about $1.7 billion in common stock to finance the transaction.
The acquisition is expected to close in the first quarter of 2024.
CrownRock is developing a 100,000-acre position in the Midland Basin, a portion of the Permian that covers 20 counties in western Texas.
As well, Occidental said it is increasing its quarterly dividend by 22% to $0.22 per share.
Contact Sean at sean@proactiveinvestors.com