Occidental to Acquire CrownRock, Strengthening its U.S. Onshore Portfolio with Premier Permian Basin Assets

• Acquisition, valued at approximately $12.0 billion, generates immediate free cash flow accretion
• CrownRock’s well-positioned assets expand Occidental’s scale in the Midland Basin
• CrownRock’s development-ready inventory high-grades Occidental’s premier Permian Basin portfolio and increases low-breakeven inventory Expected to add high-margin, lower-decline unconventional production of approximately 170 Mboed in 2024
• Supports quarterly dividend increase of 22% to $0.22 per share
• CrownRock’s operating team has a strong track record of running safe, efficient and highly productive assets and adds to Occidental’s capabilities

HOUSTON, Dec. 11, 2023 (GLOBE NEWSWIRE) -- Occidental (NYSE: OXY) today announced it entered into a purchase agreement to acquire Midland-based oil and gas producer CrownRock L.P., a joint venture of CrownQuest Operating LLC and Lime Rock Partners, for cash and stock in a transaction valued at approximately $12.0 billion, including the assumption of CrownRock’s debt.

Highlights include:

• Expected to deliver increased free cash flow on a diluted share basis, including $1 billion in the first year based on $70 per barrel WTI
• Complements and enhances Occidental’s premier Permian portfolio with the addition of approximately 170 thousand barrels of oil equivalent per day (Mboed) of high-margin, lower-decline unconventional production in 2024, as well as approximately 1,700 undeveloped locations
• Increases Occidental’s Permian unconventional sub-$40 breakeven inventory by 33%
• CrownRock’s over 94,000 net acres of premium stacked pay assets and supporting infrastructure are well positioned alongside Occidental’s legacy Midland Basin business
• Increased cash flow, along with proceeds from a new $4.5-$6.0 billion divestiture program, will enable Occidental to reduce its debt principal by at least $4.5 billion within 12 months and expect to retain its investment grade credit ratings
• Combined position builds upon Occidental’s subsurface understanding and leading well performance, while providing operational flexibility and upside

Occidental also announced its intention to increase the quarterly common stock dividend per share by $0.04 to $0.22, beginning with the February 2024 declaration, consistent with the company’s shareholder return priorities.

“We believe the acquisition of CrownRock’s assets adds to the strongest and most differentiated portfolio that Occidental has ever had. 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,” said Occidental President and Chief Executive Officer Vicki Hollub. “We are excited about combining CrownRock’s high-performing team into our organization and expect to continue Occidental’s exceptional operational and financial results for years to come.”

“Occidental’s purchase of CrownRock is a multi-win proposition for CrownRock, our employees and customers, and our community,” said CrownQuest Operating Chief Executive Officer Tim Dunn. “We congratulate Occidental and look forward to seeing their historically successful company continue to grow and prosper.”

Transaction Details

The transaction’s total consideration is approximately $12.0 billion. Occidental intends to finance the purchase with the incurrence of $9.1 billion of new debt, the issuance of approximately $1.7 billion of common equity and the assumption of CrownRock’s $1.2 billion of existing debt. The transaction is expected to close in the first quarter of 2024, subject to customary closing conditions and the receipt of regulatory approvals.

Additional Highlights

• 1,700 undeveloped locations, including 1,250 development-ready at sub-$60 WTI breakeven
• 750 locations are sub-$40 WTI breakeven, increasing Occidental’s U.S. Onshore sub-$40 breakeven inventory by 25%
• Greater basin diversification at top end of portfolio advances corporate returns and optionality
• Well-understood and rich subsurface is adjacent to some of the most prolific wells in the basin
• Majority of inventory is located in largely clean and undeveloped sections, providing ample opportunity for Occidental customization and upside
• Substantive surface acreage of nearly 10,000 acres, along with hundreds of miles of gathering and water infrastructure, provides material operational efficiency
• Acquisition expected to advance Occidental’s water recycling capability with assets that include four recycling plants
• Nearly 100% operated position with high average working interest of 93% amplifies Occidental’s capabilities
• Added position enables Occidental to build upon its deep horizon Barnett well performance leadership, in which new well production was 34% better than basin average

Conference Call / Webcast

Occidental will hold a conference call to discuss the acquisition at 11 a.m. Eastern/10 a.m. Central on December 11, 2023. The conference call may be accessed by calling 1-866-871-6512 (international callers dial 1-412-317-5417) or via webcast at oxy.com/investors. Participants can register for the conference call at https://dpregister.com/sreg/10184704/fb22d65000.

Additional details are available in a presentation on the investor section on www.oxy.com.

Advisors

Occidental’s financial advisor is BofA Securities and an affiliate thereof is providing committed financing. Occidental’s legal advisor is Latham & Watkins LLP.

CrownRock’s joint-lead financial advisors are Goldman Sachs & Co. LLC and TPH&Co, the energy business of Perella Weinberg Partners. CrownRock’s legal advisor is Vinson & Elkins LLP.

About Occidental

Occidental is an international energy company with assets primarily in the United States, the Middle East and North Africa. We are one of the largest oil and gas producers in the U.S., including a leading producer in the Permian and DJ basins, and offshore Gulf of Mexico. Our midstream and marketing segment provides flow assurance and maximizes the value of our oil and gas. Our chemical subsidiary OxyChem manufactures the building blocks for life-enhancing products. Our Oxy Low Carbon Ventures subsidiary is advancing leading-edge technologies and business solutions that economically grow our business while reducing emissions. We are committed to using our global leadership in carbon management to advance a lower-carbon world. Visit oxy.com for more information.

About CrownQuest Operating

CrownQuest Operating is a privately owned company based in Midland, TX. It has managed the CrownRock LP partnership since its inception in 2007. CrownQuest and its predecessors have operated in the Permian Basin since their founding in 1996. The company continues its other business interests, primarily in land and minerals management. Visit crownquest.com for more information.

About Lime Rock Partners

Since its inception in 1998, Lime Rock Management has raised over $10.0 billion in private equity funds and affiliated co-investment vehicles for investment in the energy industry through three strategies: Lime Rock Partners, investors of growth capital in E&P and oilfield service companies; Lime Rock Resources, acquirers and operators of oil and gas properties in the United States; and Lime Rock New Energy, investors of growth capital in new energy companies in North America. With over 100 portfolio company investments made over the last 25 years, Lime Rock Partners is a creative investment partner in building differentiated oil and gas businesses, side by side, with entrepreneurs every day. Visit lrpartners.com for more information.