Occidental Petroleum announced its acquisition of private shale producer CrownRock in a deal worth $12 billion, as the oil giant sets its sights on the Permian Basin. This move comes after Occidental faced significant challenges due to its 2019 acquisition of Anadarko Petroleum, which coincided with the onset of the COVID-19 pandemic and a drastic drop in oil prices. However, the post-pandemic surge in demand has left Occidental with ample cash, prompting its expansion into the lucrative Permian Basin.
While some industry outsiders express concern about Occidental’s decision to complete the acquisition using cash and increase its debt, unlike Exxon’s recent all-stock acquisition of Pioneer, the company remains undeterred. With its total debt rising to $28 billion from $18 billion, Occidental’s CEO Vicki Hollub emphasized that Berkshire Hathaway did not opt to finance the deal this time. It seems that Berkshire Hathaway’s Warren Buffett subscribes to the notion of fool me once, shame on you. Fool me twice, shame on me.
Occidental Petroleum’s move into the Permian Basin not only signals the company’s confidence in the rebound of the fossil fuel industry but also highlights the region’s strategic importance. The Permian Basin, spanning across western Texas and New Mexico, is well-known for its abundant reserves and has long been a hotbed for oil and gas activities. By solidifying its presence in this energy-rich region, Occidental aims to further capitalize on the rising demand for fossil fuels in a post-pandemic world.
As Occidental expands its operations, it is essential to consider the potential implications on the environment and the ongoing energy transition. While fossil fuels continue to play a central role in meeting global energy demands, the push for renewable alternatives and carbon reduction remains a significant priority. Occidental Petroleum will need to navigate these shifting dynamics as it seeks to capitalize on the Permian Basin’s resources.
In summary, Occidental Petroleum’s acquisition of CrownRock highlights the company’s determination to bounce back from the challenges it faced with the Anadarko acquisition. By venturing into the Permian Basin, Occidental is capitalizing on the region’s vast reserves and the post-pandemic surge in demand. While concerns about the debt increase persist, the company remains optimistic about its prospects in the ever-evolving energy landscape. With the fossil fuel industry showing signs of continued growth, Occidental Petroleum is making its move.
