What is Occidental acquiring and for how much?

Occidental is acquiring 100% of the partner interests in CrownRock, L.P., a privately held oil and gas producer focused on the Permian Basin. Total consideration is about $12.5 billion: roughly $9.4 billion in cash (including working capital adjustments), about 29.6 million shares of OXY common stock, and the assumption of about $1.2 billion of CrownRock debt. At the assumed $63.15 share price, the preliminary total purchase price is about $11.3 billion, and the stock portion moves with OXY's share price until closing.

When is the CrownRock deal expected to close, and what could still stop it?

The company expects closing in August 2024, after the financing marketing period. The HSR antitrust waiting period has expired, and the other conditions are satisfied except those to be met at closing. Risks include regulatory approvals, financing execution and the general conditions listed in the forward-looking statements.

What is the Ecopetrol transaction and is it certain?

Ecopetrol has notified OXY of its intent to buy an undivided 30% interest in the CrownRock assets for about $3.6 billion, subject to agreeing a structure. Discussions are ongoing, but no definitive agreement exists, and the filing makes no assurance a deal will be signed or closed. If the parties cannot agree by August 2024, Ecopetrol has an option, which also expires in August 2024, to acquire an indirect 49% interest through the Rodeo Midland Basin Joint Venture, and it is not assured Ecopetrol would exercise it.

How will the acquisition affect Occidental's balance sheet and earnings?

Debt rises sharply: pro forma long-term debt increases from about $18.5 billion to about $26.6 billion before any Ecopetrol proceeds. Ecopetrol's payment would be used to repay about $3.6 billion of term loans, reducing debt and interest expense. On a pro forma basis, 2023 diluted EPS would be $4.19 at 100% CrownRock ownership, compared with $3.90 historically, and Q1 2024 diluted EPS would be $0.63 versus $0.56. These figures are illustrative and exclude synergies and integration costs.

What do the CrownRock financials and reserve report show?

CrownRock's audited 2023 results show revenue of about $2.52 billion, operating income of about $1.33 billion and net income of about $1.28 billion. Year-end 2023 total assets were $4.44 billion. Cawley, Gillespie & Associates' SEC-pricing audit puts total proved reserves at about 666.5 MMBoe (about 272 MMbbl oil, 1.07 Tcf gas and 215 MMbbl NGL), of which about 326 MMBoe is proved developed. The standardized measure of discounted future net cash flows is about $8.4 billion, based on a $74.70/bbl oil price at year-end 2023.

OXY/OXY-WT 8-K SEC Disclosure

01—Abstract

Summary

Summary of the 8-K filed July 19, 2024. Cited figures are marked; the original filing is the authoritative source.

Occidental Petroleum (OXY) filed this 8-K to supply financial statements and related exhibits for its pending acquisition of CrownRock, L.P., a privately held Permian Basin (Midland Basin) producer.

The Purchase Agreement, signed December 10, 2023, covers 100% of CrownRock's partner interests. The HSR waiting period has expired, so the closing conditions are satisfied apart from those to be met at closing, and the deal is expected to close in August 2024 after the financing marketing period. Per the pro forma statements, total consideration is about $12.5 billion^a, made up of roughly $9.4 billion in cash, about 29.6 million OXY shares, and $1.2 billion of assumed CrownRock debt.

Occidental plans to fund the cash portion with $9.7 billion^b of new debt and cash on hand. At the $63.15 assumed share price, the stock component is about $1.9 billion, and the preliminary total estimated purchase price is about $11.3 billion. The filing also discloses a potential Ecopetrol Transaction.

Ecopetrol has signaled intent to acquire an undivided 30% interest in the CrownRock assets for about $3.6 billion^c, with proceeds going to pay down term loans. No definitive agreement exists yet. If the parties cannot agree on structure by August 2024, Ecopetrol holds an option, expiring in August 2024, to acquire an indirect 49% interest through the existing Rodeo Midland Basin Joint Venture.

The pro forma statements show both the 100% and 70% CrownRock ownership cases, so investors should treat the Ecopetrol outcome as a key variable for net debt, share count and per-barrel economics. The exhibits include CrownRock's audited FY2023 financials (net income of about $1.28 billion^d on about $2.52 billion of revenue, with total assets of $4.44 billion), Cawley, Gillespie & Associates' SEC-pricing reserve audit (about 666.5 MMBoe proved reserves at year-end 2023, roughly 41% proved developed), and unaudited Q1 2024 interim statements. The pro forma data show Occidental's combined leverage rising materially: long-term debt moves from about $18.5 billion to roughly $26.6 billion before any Ecopetrol proceeds.

The purchase price allocation is preliminary and may change materially. Forward-looking risks include oil price exposure, integration, and regulatory approval, and the filing notes that Ecopetrol's participation is not assured.

02—Key points

Key Highlights

Acquisition of 100% of CrownRock, L.P. (Permian/Midland Basin) for approx. $12.5B total consideration: ~$9.4B cash, ~29.6M OXY shares, and ~$1.2B assumed debt; preliminary purchase price ~ $11.3B at $63.15/share
HSR waiting period has expired; remaining closing conditions are largely satisfied, with closing expected in August 2024
Ecopetrol potential acquisition of an undivided 30% interest for ~$3.6B, with proceeds to pay down term loans; no definitive agreement yet, and a 49% indirect option expires in August 2024
Financing: ~$9.7B of new debt (incl. $2.0B 364-day and $2.7B 2-year term loans and $5.0B senior notes, ~6.25% weighted average rate), plus cash on hand; pro forma long-term debt rises to ~$26.6B
CrownRock FY2023: revenue ~$2.52B, net income ~$1.28B, total assets $4.44B; year-end 2023 proved reserves ~666.5 MMBoe, per CG&A's SEC-pricing audit
Pro forma 2023 EPS dilution is modest: diluted EPS of $4.19 at 100% CrownRock ownership vs. $3.90 historical; $0.61 vs. $0.56 in Q1 2024
Purchase price allocation and pro forma figures are preliminary; the final allocation may differ materially once valuation work is complete

03—Questions

Frequently Asked Questions

What is Occidental acquiring and for how much?
Occidental is acquiring 100% of the partner interests in CrownRock, L.P., a privately held oil and gas producer focused on the Permian Basin. Total consideration is about $12.5 billion: roughly $9.4 billion in cash (including working capital adjustments), about 29.6 million shares of OXY common stock, and the assumption of about $1.2 billion of CrownRock debt. At the assumed $63.15 share price, the preliminary total purchase price is about $11.3 billion, and the stock portion moves with OXY's share price until closing.
When is the CrownRock deal expected to close, and what could still stop it?
The company expects closing in August 2024, after the financing marketing period. The HSR antitrust waiting period has expired, and the other conditions are satisfied except those to be met at closing. Risks include regulatory approvals, financing execution and the general conditions listed in the forward-looking statements.
What is the Ecopetrol transaction and is it certain?
Ecopetrol has notified OXY of its intent to buy an undivided 30% interest in the CrownRock assets for about $3.6 billion, subject to agreeing a structure. Discussions are ongoing, but no definitive agreement exists, and the filing makes no assurance a deal will be signed or closed. If the parties cannot agree by August 2024, Ecopetrol has an option, which also expires in August 2024, to acquire an indirect 49% interest through the Rodeo Midland Basin Joint Venture, and it is not assured Ecopetrol would exercise it.
How will the acquisition affect Occidental's balance sheet and earnings?
Debt rises sharply: pro forma long-term debt increases from about $18.5 billion to about $26.6 billion before any Ecopetrol proceeds. Ecopetrol's payment would be used to repay about $3.6 billion of term loans, reducing debt and interest expense. On a pro forma basis, 2023 diluted EPS would be $4.19 at 100% CrownRock ownership, compared with $3.90 historically, and Q1 2024 diluted EPS would be $0.63 versus $0.56. These figures are illustrative and exclude synergies and integration costs.
What do the CrownRock financials and reserve report show?
CrownRock's audited 2023 results show revenue of about $2.52 billion, operating income of about $1.33 billion and net income of about $1.28 billion. Year-end 2023 total assets were $4.44 billion. Cawley, Gillespie & Associates' SEC-pricing audit puts total proved reserves at about 666.5 MMBoe (about 272 MMbbl oil, 1.07 Tcf gas and 215 MMbbl NGL), of which about 326 MMBoe is proved developed. The standardized measure of discounted future net cash flows is about $8.4 billion, based on a $74.70/bbl oil price at year-end 2023.

04—Continue

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