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Occidental Petroleum (Oxy) has agreed to buy CrownRock, a privately held energy producer in the Permian Basin, for $12bn. Oxy will issue $9.1bn in debt and about $1.7bn in common stock to finance the transaction and complete it by Q1 2024. The deal is said to be a move to consolidate its position in the US energy sector, especially in the Permian Basin, the largest oil-producing region in the US. CNBC notes that the deal would add 170,000 barrels of oil equivalent per day to Oxy’s production and 1,700 undeveloped locations to the company’s operations in the Permian region. The deal adds to Oxy’s M&A portfolio following the takeover of Anadarko in 2019 at a $55bn valuation. The CEO Vicki Hollub said that the goal was to slash its debt below $15bn despite the company having to assume $9.1bn in obligations as part of the CrownRock acquisition. Oxy plans to cut its debt by divesting some domestic assets that are not core to its portfolio.
Oxy’s dollar bonds were trading weaker with its 7.125% 2027s down 0.3 points to 102.85, yielding 6.27%.
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