Occidental Petroleum (OXY), backed by Warren Buffett, is leading the race to acquire a privately held Permian Basin oil producer. This move is part of OXY’s strategy to expand its presence in the Permian Basin following major M&A activity by industry giants Exxon Mobil (XOM) and Chevron (CVX).
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Occidental Petroleum is in talks to buy CrownRock, a private company, in a deal valued at more than $10 billion, as reported by the Wall Street Journal.
OXY shares initially rose but later dropped 1.7% to 59.34 amid a 2% fall in U.S. oil prices during recent market action. On the previous day, OXY shares had gained 0.45% to 60.33.
CrownRock, led by billionaire Timothy Dunn and supported by private-equity firm Lime Rock Partners, holds over 80,000 acres in the northern part of the Midland Basin in Texas, a key region of the Permian Basin. CrownRock’s daily production is approximately 150,000 barrels of oil equivalent, according to the WSJ.
As of August, Enverus data showed that OXY, backed by Warren Buffett, was the third-largest producer in the Permian Basin.
Exxon Mobil solidified its Permian Basin position with a $60 billion acquisition of Pioneer Natural Resources (PXD) in October. Chevron swiftly followed with a $53 billion purchase of Hess (HES), expanding its assets in offshore Guyana. Also, Warren Buffett holds a nearly 6% stake in Chevron.
What Do The Exxon Mobil And Chevron Deals Say About The Oil Industry’s Future?
Following the recent wave of consolidation among top tier energy companies, smaller players are reportedly seeking acquisitions in the Permian Basin. CrownRock, one of the largest privately held producers in the region, has become a prime target, according to the Wall St. Journal.
Warren Buffett And OXY
Occidental Petroleum’s most recent major acquisition was the $38 billion purchase of Anadarko in 2019. The management faced criticism for increasing debt just before the onset of the Covid-19 pandemic.
Warren Buffett’s Berkshire Hathaway (BRKB) holds a 25.78% stake in Houston-based Occidental Petroleum. Buffett has stated that he has no plans of taking over the company.
OXY has declined more than 2% in November and 4% in 2023. Its stock has a 37 Composite Rating out of 99, a 42 Relative Strength Rating, and a nine EPS Rating.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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