Occidental in Talks to Buy Permian Driller CrownRock

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Occidental Petroleum is in talks for the potential acquisition of fellow oil and gas producer CrownRock, active in the Permian, the Wall Street Journal has reported, citing unnamed sources familiar with the development.

According to these sources, the deal could value CrownRock at over $10 billion, including debt, the report noted.

CrownRock operates in the northern part of the Midland Basin and has some 80,000 net acres to its name. The company pumps some 150,000 barrels of oil equivalent daily, per Fitch Ratings data cited by the Wall Street Journal.

If the deal is confirmed and sealed, it would be the latest addition to a series of major acquisitions in the shale patch with a focus on the Permian-the most prolific of the shale basins.

Consolidation has become the preferred method of growth for the large players in the U.S. shale patch. The last two years saw a string of large deals, including Occidental's acquisition of Anadarko for some $38 billion, with the financial backing of Warren Buffett's Berkshire Hathaway.

Pioneer Natural Resources was among the most active buyers aiming to grow through acquisitions, buying Parsley Energy for over $7 billion in 2020 and DoublePoint Energy for over 6 billion in 2021. This year, Pioneer became an acquisition target itself, with Exxon striking a deal worth close to $60 billion to take over the company.

Analysts have expected more and larger acquisitions in the shale patch for some time now, noting that as untapped acreage ran out the larger drillers did not have a lot of growth options left on the table besides acquiring smaller rivals and absorbing their acreage.

The Wall Street Journal report is the latest confirmation that this process of consolidation is well underway and it will likely end with a lot fewer players in the Permian than there are now.

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Exxon bought Pioneer. Chevron bought Hess (though not really much in the way of Permian acreage there). And now looks like Oxy buying CrownRock is speculated as the next domino. Devon has been rumored to be courting Marathon.

Also, interesting, while there has been many articles published about Exxon and Oxy getting into the carbon sequestration and “energy transition” game, moves like this are good for showing that they are still oil & gas companies at this time, first and foremost, if there’s at least any validity in these reports on Oxy’s behalf.

It was rumored a couple months back that Chevron was courting CrownRock.