Occidental Petroleum said Dec. 11 that it has entered into an agreement to purchase Midland Basin E&P CrownRock LP in a cash and stock transaction valued at approximately $12 billion, including the assumption of debt.
CrownRock, a joint venture of CrownQuest Operating LLC and Lime Rock Partners, adds layers of inventory to Occidental’s Permian Basin position, including 1,700 undeveloped locations, with 1,250 development-ready at sub-$60 WTI breakevens. Occidental said 750 locations break even at below $40 WTI, increasing Occidental’s U.S. onshore inventory with those economics by 25%.
The company said it expects to add high-margin, lower-decline unconventional production of approximately 170,000 boe/d in 2024 through the acquisition.
The assets also include surface acreage of nearly 10,000 acres along with hundreds of miles of gathering and water infrastructure. The position is nearly 100% operated with an average working interest of 93%.
Occidental intends to finance the purchase with the incurrence of $9.1 billion of new debt, the issuance of approximately $1.7 billion of common equity and the assumption of CrownRock's $1.2 billion of existing debt.
"We believe the acquisition of CrownRock's assets adds to the strongest and most differentiated portfolio that Occidental has ever had,” said Occidental President and CEO Vicki Hollub. “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," said Occidental President and CEO Vicki Hollub.
CrownQuest CEO Tim Dunn said the purchase is a “multi-win proposition” for CrownRock.
"We congratulate Occidental and look forward to seeing their historically successful company continue to grow and prosper," Dunn said.
The transaction is expected to close in first-quarter 2024, subject to customary closing conditions and the receipt of regulatory approvals.
Occidental's financial adviser is BofA Securities, with an affiliate providing committed financing. Occidental's legal adviser is Latham & Watkins LLP.
CrownRock's joint-lead financial advisers are Goldman Sachs & Co. LLC and TPH&Co, the energy business of Perella Weinberg Partners. CrownRock's legal adviser is Vinson & Elkins LLP.
Occidental also announced its intention to increase the company’s quarterly common stock dividend per share by $0.04 to $0.22, beginning with the February 2024 declaration.
Recommended Reading
Exclusive: Cost-effective Benefits of Extracting from Mature Assets
2024-05-13 - Baker Hughes' well abandonment leader Bart Joppe details the importance of extracting resources from mature assets and the company's approach to managing a well, in this Hart Energy Exclusive interview.
TGS Starts Up Multiclient Wind, Metaocean North Sea Campaign
2024-05-07 - TGS is utilizing two laser imaging and ranging buoys to receive detailed wind measurements and metaocean data, with the goal of supporting decision-making in wind lease rounds in the German Bright.
Spate of New Contracts Boosts TechnipFMC's Subsea Profits
2024-04-30 - TechnipFMC's operational profits are growing as the company heightened its focus on “quality” subsea orders, which earned $2.4 billion for the first quarter.
Message in a Bottle: Tracing Production from Zone to Wellhead
2024-04-30 - New tracers by RESMAN Energy Technology enable measurement while a well is still producing.