Occidental Petroleum is set to raise approximately $5 billion in debt to finance its purchase of CrownRock, according to reports.
Bloomberg has revealed that the debt issuance will be investment-grade and could be announced as early as today. The debt may be divided into tranches with maturities ranging from three to 30 years.
Occidental first announced its acquisition of CrownRock, which focuses on the Permian Basin, in December. The original deal was valued at $12 billion, combining cash, stock, and debt. This amount was later adjusted to $10.8 billion.
To support the acquisition, Occidental secured a $10 billion bridge loan from a group of banks led by Bank of America. This loan has since been reduced to $5.3 billion, with the upcoming bond issue expected to replace about half of these funds.
The acquisition will enhance Occidental’s Permian portfolio by adding roughly 170,000 barrels of oil equivalent per day (boed) of high-margin, low-decline unconventional production in 2024, along with around 1,700 undeveloped locations.
It is anticipated that the deal will increase Occidental’s free cash flow per diluted share, including an expected $1 billion in the first year based on a $70 per barrel West Texas Intermediate price.
Occidental President and CEO Vicki Hollub emphasized that CrownRock is a strategic fit, allowing the company to expand its presence in the Midland Basin and deliver immediate free cash flow benefits to shareholders.
The acquisition of CrownRock is part of a broader trend of major deals in the Permian Basin, following Exxon’s purchase of Pioneer Natural Resources and Chevron’s planned acquisition of Hess Corp.