Warren Buffett-backed Occidental Petroleum reportedly leads a pack of contenders vying to close a deal for a privately held Permian Basin oil producer. OXY aims to increase its share of the consolidating Permian Basin pie, following the significant recent M&A moves by energy giants Exxon Mobil and Chevron.
Occidental Petroleum is in discussions to purchase the privately-held CrownRock in a deal valued at more than $10 billion, according to the Wall Street Journal.
The Warren Buffett stock pared early gains, dropping 2% to 59.14 as U.S. oil prices fell 3% Thursday during market action. On Wednesday, OXY shares gained 0.45% to 60.33.
CrownRock is headed by billionaire Timothy Dunn, and backed by the private-equity firm Lime Rock Partners. The company owns more than 80,000 acres in the northern part of the Midland Basin in Texas, part of the prolific Permian Basin. CrownRock produces about 150,000 barrels of oil equivalent a day, according to the WSJ report.
As of August, Warren Buffett-backed OXY was the number-three producer in the Permian Basin, according to Enverus data.
Exxon Mobil firmed up its Permian Basin holdings with a $60 billion deal for Pioneer Natural Resources in October. Chevron quickly followed up with its $53 billion purchase of Hess, expanding its ownership in offshore Guyana. Warren Buffett also holds a nearly 6% stake in Chevron.
What Do The Exxon Mobil And Chevron Deals Say About The Oil Industry's Future?
Following that rash of top tier consolidation, smaller energy companies have reportedly sought acquisitions in the Permian Basin. CrownRock — among the last large-scale privately owned producers in the region — has been a key target, according to the Wall St. Journal.
Warren Buffett And OXY
Occidental Petroleum's last major purchase was the $38 billion acquisition of Anadarko in 2019. Management was roundly criticized for adding debt to the balance sheet just before the onset of the Covid-19 pandemic.
Warren Buffett's Berkshire Hathaway holds a 25.78% stake in Houston-based Occidental Petroleum. Buffett told shareholders earlier this year he has no intention of taking over the company.
OXY has dropped more than 2% in November and has fallen 4% in 2023. Occidental stock has a 37 Composite Rating out of 99. The Warren Buffett stock also has a 42 Relative Strength Rating and a nine EPS Rating.
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