Occidental Petroleum acquires Permian Basin player CrownRock in $12B deal

Dec. 11 (UPI) -- Occidental Petroleum, a $50 billion energy company backed by investor Warren Buffett's Berkshire Hathaway firm, announced Monday it has acquired Texas oil producer CrownRock for $12 billion.

Houston-based Occidental said the cash-and-stock deal will be financed with the incurrence of $9.1 billion of new debt and the issuance of approximately $1.7 billion of new common share, while CrownRock's existing debt of $1.9 billion will be assumed.

The transaction will result in increased cash flow, company officials said, and is expected to close in the first quarter of 2024, subject to customary closing conditions and the receipt of regulatory approvals.

With the purchase, Occidental gains nearly 100,000 acres of prime oil-producing land in western Texas' Permian Basin, by far the nation's most productive region. The basin is currently yielding nearly 6 million barrels of oil per day, according to the U.S. Energy Information Administration.

Specifically, CrownRock's holdings are located in the 13,000-square-mile Midland Basin, a fast-developing section of the Permian, and include 1,700 undeveloped locations.

"We believe the acquisition of CrownRock's assets adds to the strongest and most differentiated portfolio that Occidental has ever had," Occidental President and CEO Vicki Hollub said in a statement. "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."

CrownRock is one of the last major private producers in the Permian, CNBC reported, while noting the deal is part of an ongoing trend of consolidation in the West Texas oil industry.

Occidental Petroleum in the nation's ninth-largest energy company.

Buffett's Berkshire Hathaway Inc. increased its holdings in the oil producer by more than 2.1 million shares earlier this year, boosting its total ownership stake to 224.1 million shares, or 25.1% of the shares outstanding.