DEAL ALERT (OXY BUYS CROWN)

Energy Advisors Group has released a Special Supplement to its recent review of the MIDLAND BASIN play as a continuation of our Market Monitor Series and thought leadership efforts. This 14-page Special Report analyzes OXY's $12 billion acquisition of CrownRock, LP and provides additional comments, content, contrast and context to an industry undergoing both challenges and opportunities at year end 2023.

Quick Quotes:

“The trend of core strategic short cycle assets being acquired by larger public players continues unabated as OXY follows Exxon and Chevron in shoring up inventory for future production maintenance, dividends and growth.”

              – See What The Street Says, Slide 10

  “Most oil companies have shunned debt. Not OXY! Here again they double down on debt as a means to acquire CrownRock in direct contrast to Exxon and Chevron's recent acquisitions of Pioneer and Hess.”

               – See Deal Overview, Slides 4 & 5

 "A couple of trends are driving Permian M&A including not only the natural tendency to amalgamate as buyers get bigger and sellers sell but also improve technology that increase recoveries AND deeper zones like the Barnett that offer unique opportunities for Exxon and OXY - and also good Basins just get better."

               – See Deal Overview, Slides 7 & 8

Some other highlights include:

Observations & Takeaways -

• Consolidation within the Midland Basin continues with OXY wins CrownRock for $12 billion, effectively tripling its Midland Basin gross volumes and balancing with its Delaware position
• This is the second largest Midland Basin deal on record coming just two months after ExxonMobil's acquisition of Pioneer Natural Resources for $64.5 billion
• This $12 billion move is OXY's largest since its hard-fought battle for Anadarko in April 2019 where they outbid Chevron and paid $57 billion pre-Covid 
• Other reported suitors for CrownRock included ConocoPhillips, Devon, Marathon and Diamondback. Bloomberg reported BP (lacks a CEO) and Shell may have set this deal out; (See Heard On The Street, Slide 10)
• Since 2021, there have been eight Midland Basin deals over $1 billion
• The move increases OXY’s Midland Basin production from 9% to nearly 30% of its total Permian unconventional production and increases exposure to the emerging oily Barnett in the Midland Basin
• Pro-Forma, Oxy + CrownRock (officially operated under the name CrownQuest) places the company as Midland Basin’s 4th largest operator as measured on a gross operated basis – behind Exxon, Diamondback and prized private Endeavor Resources and just ahead of Ovintiv and ConocoPhillips
• Looking forward, expect more A&D activity due to, but not exclusive of, the following:
• OXY plans to sell $4.5 to $6.0 B from its U.S. domestic portfolio where it holds strong positions in the DJ; Gulf of Mexico and Permian; 
• Endeavor Resources has 350,000 net acres in the core of the Midland Basin and is actively seeking an exit in the $25 to $30 billion range
• For public/public mergers, deal premiums have been trending towards record lows as exemplified by Chevron paying a 5% premium for Hess

Deal Table--

Deal Overview--

OXY's New Permian Footprint--

OXY's U.S. Upstream Portfolio, Destined for $4.5 - $6.0 Billion of Asset Sales --

Endeavor Energy Reportedly Potentially a Seller --

Energy Advisors is working hard to expand our thought leadership and look forward to providing additional market insight for our clients through regional perspectives, M&A analysis and market monitor. 

Our firm has been serving the needs of buyers, sellers and capital providers for over thirty-five years.

TO LEARN MORE:

Energy Advisors Group

Brian Lidsky

Director

Phone: 713-600-0138

---Email: [email protected]

Corporate Office:

4265 San Felipe Ste 650

Houston TX 77027

Corporate Switchboard: 713-600-0123