Oxy Set to Raise $5 Billion in Debt for CrownRock Purchase

Occidental is planning on issuing debt worth some $5 billion to fund its acquisition of CrownRock.

According to a Bloomberg report, the issue will be investment-grade and could be announced later today, unnamed sources told the publication. The issue could comprise tranches with maturities ranging from three to 30 years.

Occidental announced the deal to acquire Permian-focused CrownRock in December last year. The deal was going to combine cash and stock, including debt, with a price tag of $12 billion in total at the time. Later, the value of the deal was revised to $10.8 billion.

To fund the acquisition, Oxy sealed a $10-billion bridge financing deal with a group of banks led by Bank of America. Later, the size of that loan was reduced to $5.3 billion, with the upcoming bond set to replace around half of the borrowed funds.

The acquisition will boost Occidental’s premier Permian portfolio with the addition of around 170,000 barrels of oil equivalent per day (boed) of high-margin, lower-decline unconventional production in 2024, as well as approximately 1,700 undeveloped locations.

It’s also expected to deliver increased free cash flow on a diluted share basis, including $1 billion in the first year based on $70 per barrel West Texas Intermediate price.

“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,” Occidental President and CEO Vicki Hollub said at the time, as the company confirmed earlier reports about the tie-up.

Oxy’s takeover of CrownRock was part of a string of major acquisition deals in the shale patch with a focus on the most prolific play—the Permian. It followed Exxon’s acquisition of Pioneer Natural Resources and Chevron’s planned takeover of Hess Corp.

By Charles Kennedy for Oilprice.com

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