Occidental lands $12 billion takeover of shale producer CrownRock

investing.com:

By Sabrina Valle, Sourasis Bose and Arathy Somasekhar

HOUSTON (Reuters) -Occidental Petroleum on Monday agreed to buy closely-held U.S. shale oil producer CrownRock in a cash-and-stock deal valued at $12 billion including debt, expanding its presence in the largest U.S. shale oilfield.

The deal comes amid a new wave of shale consolidation underpinned by Exxon Mobil (NYSE:XOM)'s $60-billion proposed deal for Pioneer Natural Resources (NYSE:PXD) and Chevron (NYSE:CVX)'s $53-billion agreement for Hess (NYSE:HES) in October.

Big producers are using the post-pandemic profit boom to prepare for a future with lower oil prices, as they look to gain scale in basins they already operate to cut costs.

«We found CrownRock to be a strategic fit,» said Chief Executive Vicki Hollub. «Where we are looking at oil prices being long term, that it would help us in (oil) downturns.»

If approved, the CrownRock takeover would make Occidental (NYSE:OXY) a bigger player in the U.S. shale than Chevron and Hess combined. The deal is expected to close in the first quarter of 2024 and would boost Occidental's Permian production by 170,000 barrels of oil and gas per day in the Midland, to 750,000 boed.

Occidental's total production was 1.2 million boed at Sept. 30.

The deal will also add immediate cash flow for investors, Hollub said, or about $1 billion considering WTI oil at $70 per barrel. Occidental said almost half of CrownRock's 1,700 undeveloped locations could generate profits with WTI at $40 per barrel.

«This acquisition adds scale that will be important to us for the Midland basin and will enable us to do cost over time,» Hollub said.

U.S. oil is trading at about $71 per barrel, encouraging higher output as members of the Organization