Why Occidental Petroleum is spending $12 billion to buy CrownRock

Takeaways

Occidental Petroleum Corp. announced Monday that it is buying Midland, Texas-based oil and gas producer CrownRock L.P. for $12 billion.
Occidental Petroleum said the deal would strengthen its assets in the Midland oil region. rich Permian Basin.
Occidental also increased its quarterly dividend from 18 cents to 22 cents per share.

With a price tag of $12 billion, Occidental Petroleum Corp. The agreement of . (OXY) to purchase CrownRock L.P, a Midland, Texas-based oil and gas producer, primarily aimed at expanding the company's reach in the Permian Basin and other oil-rich regions.

Occidental said the purchase would complement and enhance its Permian Basin portfolio by adding approximately 170,000 barrels of oil equivalent per day of “high-margin, low-decline unconventional production in 2024, as well as approximately 1,700 undeveloped sites “. CrownRock L.P. is a joint venture of CrownQuest Operating LLC and Lime Rock Partners.

CEO, Vicki Hollub, said the addition of CrownRock's assets “adds to the strongest, most differentiated portfolio Occidental has ever had,” noting that it will help the company “build scale” in the Midland section of the Permian Basin.

The transaction is expected to close in the first quarter of #39;next year.

This Western decision comes less than two months after two other blockbuster transactions in the oil sector: Exxon Mobil Corp. (XOM) acquiring Pioneer Natural Resources (PXD) for approximately $60 billion and Chevron Corp. (CVX) acquiring Hess Corp. (HES). for 53 billion dollars.

In addition to Buying CrownRock, Occidental announced it was increasing its quarterly dividend by 4 cents to 22 cents per share. He explained that the move was “in line with the company’s shareholder return priorities.”

Occidental shares Petroleum, which is a favorite of famed investor Warren Buffett, rose about 0.2% to $56.56 midday Monday after the news.