Continuing the consolidation of oil and gas in the Permian, Houston-based Occidental announced Monday that it is acquiring Midland’s CrownRock L.P., a joint venture of CrownQuest Operating and Lime Rock Partners for stock and cash in a transaction valued at $12 billion.
Oxy said it is assuming about $1.2 billion in CrownRock debt in the deal, and plans to pay for the acquisition with a $1.7 billion common equity issue and by taking on about $9.1 billion in new debt. The deal is expected to close during the first quarter of 2024.
Occidental president and CEO Vicki Hollub described the acquisition as a strengthening of Oxy’s position in the Permian.
“We believe the acquisition of CrownRock’s assets adds to the strongest and most differentiated portfolio that Occidental has ever had. 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.”
Vinson & Elkins advised CrownRock with a team led from Houston by partners Steve Gill and Robert Kimball, along with senior associate Sang Lee. The team also included Matt Fiorillo, Terrence Ogren, and Griff Kimball. Other key team members were partners John Grand and Katherine Frank and counsels Elena Sauber and Joanna Enns (corporate); partners John Lynch, Brian Russell, and associates Keleigh Carver and Patrick Darby (tax); partner Hill Wellford, counsel Evan Miller, senior associate Ryan Will and associate Adam Thomas (antitrust); partners Matthew Dobbins and Patrick Traylor and associate Simon Willis (environmental); counsel Winston Skinner and senior associate Andrew DeVore (energy regulatory); partner Michael Kurzer and associates Alexa Chally and Sean Dao (technology transactions/IP); partner Shane Tucker and associates Keira Kuntz and Cassie Zárate (executive compensation/benefits); partner Sean Becker and associates Peter Goetschel and Jordan Peck (employment/labor); partner David Wicklund (finance); partner Russell Oshman and counsel Victoria Short (real estate); and partners Craig Zieminski and Jeff Crough (litigation).
Latham & Watkins advised Occidental with a team led by Houston partners John Greer and Bill Finnegan and Houston counsel Thomas Verity, with associates Bryan Ryan, Morgen Seim, and Molly Elkins. Advice was also provided on debt matters by Austin partner Samuel Rettew; on benefits matters by Houston counsel Krisa Benskin, with associate Christina Schrantz; on antitrust matters by Washington, D.C. partner Jason Cruise and Washington, D.C. counsel Peter Todaro, with associates Matthew Piehl, Doug Tifft, and Ethan Hoffman; on finance matters by Houston partner Matthew Jones, with associate Chris Wood; on tax matters by Houston partners Tim Fenn and Jim Cole, with associate Dominick Constantino; on oil and gas related matters by Houston partner Mike King, with associates Joseph Kmetz and Corynn Wilson; on environmental matters by Los Angeles/Houston partner Joshua Marnitz, with associate Jacqueline Zhang; on intellectual property matters by Bay Area partner Michelle Gross, with associate Zachary Shufro; and on insurance matters by Los Angeles partner Drew Levin, with associate Harrison White.
Oxy’s financial advisors are BofA Securities. CrownRock’s joint-leading financial advisors are Goldman Sachs & Co. and TPH & Co, the energy business of Perella Weinberg Partners.
Paul Hastings represented BofA with a team led by global finance partner Morgan Bale. The team also includes partners Marc Lashbrook and Jon Kubek, with support from associates Stephen Rettger, Celia Scherman, and Madeleine Shiff.
The acquisition also signals Oxy’s recovery from its pre-Covid purchase of Anadarko Petroleum for $55 billion (including debt). Although the deal, approved by stockholders in August 2019, made Oxy a prime presence in one of the most productive basins in North America, a subsequent collapse of oil & gas pricing left Occidental with what many saw as an uncertain future.
Occidental common stock rose slightly on the NYSE following the announcement Monday.
Oxy said the acquisition adds about 170 thousand barrels a day of high-margin, lower-decline unconventional production and will increase the company’s cash flow by $1 billion in the coming year, assuming a stable $70 WTI price for each barrel of oil.
Occidental also announced its intention to increase the quarterly common stock dividend per share by $0.04 to $0.22, beginning with the February 2024 declaration.
In August Latham’s Greer and Finnegan advised Oxy on its $1.1 billion acquisition of Canada’s Carbon Engineering Ltd.