Occidental Petroleum in Talks to Buy Permian Producer CrownRock
Deal could value CrownRock well above $10 billion including debt
Occidental Petroleum OXY 0.45%increase; green up pointing triangle is in talks to buy CrownRock, a major energy producer in the west Texas area of the Permian basin, continuing a frenzy of deal making in the oil patch.
A deal for the closely held company, which could be valued well above $10 billion including debt, could come together soon assuming the talks don’t fall apart or another suitor doesn’t prevail, according to people familiar with the matter.
CrownRock owns more than 80,000 net acres in the northern part of the Midland Basin in Texas, part of the Permian, the largest oil producing region in the U.S. It is led by Texas businessman and billionaire Timothy Dunn, and backed by the private-equity firm Lime Rock Partners.
The company is one of the last remaining sizable private companies in the Permian, alongside Endeavor Energy Resources. Before the shale boom took off, Dunn accumulated leases in the region before trading and swapping land to build the enviable position CrownRock now sits on in a coveted part of the basin.
The company produces about 150,000 barrels of oil equivalent a day, according to Fitch Ratings.
Oil and gas producers have faced pressure to scale up, especially after Exxon Mobil struck a nearly $60 billion deal for Pioneer Natural Resources in October. Days later, Chevron agreed to buy Hess for $53 billion.
Occidental has a market capitalization of around $53 billion. Its last major purchase—the $38 billion acquisition of Anadarko in 2019—saddled the company with debt and attracted activist investor Carl Icahn.
Chief Executive Vicki Hollub spent the ensuing years cutting jobs and slashing spending. Rising oil prices following Russia’s invasion of Ukraine helped the company report banner profits in 2022. Icahn sold his shares and gave up his board seats that same year.
Meanwhile, Warren Buffett’s Berkshire Hathaway, which had helped Hollub finance the Anadarko deal, boosted its stake and now owns around 26%, according to FactSet. Buffett has lauded Hollub’s leadership.
Under Hollub, the company has developed ambitious plans to suck carbon dioxide out of the atmosphere, an effort the CEO sees as enabling her goal to produce so-called net-zero oil.
Lime Rock, a Houston private-equity firm, first invested in CrownRock in 2007. It later raised a nearly $2 billion fund to buy CrownRock outright in 2018.