Shale driller CrownRock is reportedly selling a stake in Occidental Petroleum, with hopes of generating approximately $1.7 billion, according to a Bloomberg report citing unnamed sources.
The report indicates that CrownRock, a prominent Permian oil producer, is offering 29.6 million shares of Occidental at a discounted rate compared to the closing price of $58.98 per share on Monday.
Occidental Petroleum had previously announced a deal to acquire CrownRock in December of last year. The transaction, valued at $12 billion including debt, significantly strengthened Occidental’s Permian Basin portfolio. The acquisition added an estimated 170,000 barrels of oil equivalent per day of high-margin, lower-decline unconventional production for 2024, along with around 1,700 undeveloped drilling locations.
Occidental President and CEO Vicki Hollub described the acquisition as a strategic move. “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,” she said earlier this year.
The deal is among the largest in a wave of consolidation within the shale industry, a trend that has drawn increased regulatory scrutiny. Initially, Occidental expected to finalize the CrownRock deal in the first quarter of this year. However, the completion has been delayed to the second half of the year due to a request for additional information from the Federal Trade Commission (FTC) as it continues to review the merger.
The FTC is currently reviewing several proposed acquisitions within the U.S. oil and gas sector amidst a series of mergers and acquisitions. This trend has included high-profile deals involving industry giants like ExxonMobil, Chevron, and large independents like Occidental. The consolidation has sparked calls from some Democratic lawmakers for more stringent scrutiny over potential antitrust violations, a demand to which regulators have responded.