HOUSTON, TX – Occidental Petroleum Corp (NYSE:OXY) has announced the imminent completion of its acquisition of CrownRock L.P., a move that will consolidate its holdings in the lucrative Permian Basin. The transaction, initially disclosed on December 10, 2023, is expected to close in August 2024 following the satisfaction of closing conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
This strategic acquisition follows Occidental's agreement with CrownRock Holdings and is poised to enhance the company's petroleum and natural gas portfolio. Occidental has also disclosed ongoing negotiations with Ecopetrol Permian LLC for the latter's acquisition of a 30% interest in the CrownRock assets.
The potential deal, valued at approximately $3.6 billion, is contingent on the successful completion of the CrownRock acquisition and various customary conditions, including regulatory approvals.
The proposed Ecopetrol transaction, if finalized, would represent a significant partnership between Occidental and the Colombian national oil company, further expanding Occidental's footprint in the energy sector. Occidental anticipates utilizing the proceeds from the Ecopetrol transaction to reduce its term loan debt, aligning with its financial strategy.
In addition to the acquisition news, Occidental has filed audited consolidated financial statements of CrownRock as of December 31, 2023, and unaudited condensed consolidated financial statements for the first quarter of 2024. These documents, alongside a reserves report by Cawley, Gillespie & Associates, Inc., are intended to provide stakeholders with a comprehensive view of CrownRock's financial health and assets.
Investors are advised to consider this information based on a press release statement. The unfolding developments suggest a pivotal moment for Occidental as it navigates the competitive landscape of the energy industry and seeks to reinforce its market position through strategic acquisitions and partnerships.
In other recent news, Occidental is set to finalize its acquisition of CrownRock in August, marking a significant step in the company's strategic growth plans. The acquisition is expected to enhance Occidental's portfolio and shareholder returns.
Analyst firms have been active in response to Occidental's recent developments. Stephens reduced the company's financial outlook, adjusting the stock's price target to $77 from $78, while maintaining an Overweight rating. This adjustment was primarily attributed to a downward revision of second-quarter cash flow per share and earnings before interest, taxes, depreciation, and amortization estimates, due to prereleased prices for oil, natural gas liquids, and gas.
In addition, Warren Buffett's Berkshire Hathaway (NYSE:BRKa) has been expanding its stake in Occidental, reaching nearly a 29% ownership. The conglomerate acquired an additional 2.95 million shares, part of a total of 5.5 million shares purchased this month.
On the analyst front, Roth/MKM maintained a neutral stance on Occidental, influenced by the company's relatively higher debt and lower projected long-term growth. Truist Securities downgraded the company's stock from Buy to Hold, citing less anticipated benefits from its CrownRock acquisition.
Occidental exceeded Q1 expectations with record production and significant cost reductions. The company plans to improve cash flow by over $1 billion and is focused on strengthening its balance sheet. These are the recent developments concerning Occidental.
InvestingPro Insights
As Occidental Petroleum Corp (NYSE:OXY) makes headlines with its strategic moves in the Permian Basin, investors and stakeholders may find the following insights from InvestingPro valuable for a deeper understanding of the company's financial position.
With a market capitalization of $56.51 billion and a P/E ratio of 16.18, Occidental appears to be maintaining a strong presence in the market. Notably, the company has been profitable over the last twelve months, with a gross profit margin of 59.58%, underscoring its operational efficiency.
InvestingPro Tips highlight Occidental's track record of stability, as evidenced by its 51 consecutive years of dividend payments, alongside a dividend yield of 1.38%. Moreover, the low price volatility of Occidental's stock may appeal to investors seeking a more stable investment in the energy sector.
For those looking to delve further into Occidental's financial metrics and analyst predictions, there are additional InvestingPro Tips available, which can be explored using the promo code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
Investors can also take note of the company's next earnings date on August 7, 2024, to stay updated on Occidental's financial performance following the anticipated CrownRock L.P. acquisition. With the company's share price currently at 89.52% of its 52-week high and an InvestingPro fair value estimate of $67.34, Occidental's outlook appears promising as it continues to execute on its growth strategy.
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