Eazy in Way - Occidental Raises Production on CrownRock Acquisition Occidental Raises Production on CrownRock Acquisition

Occidental Raises Production on CrownRock Acquisition

Published: August 10, 2024
Occidental Petroleum Corp. has announced an increase in its production and capital spending plans following its recent $10.8 billion acquisition of CrownRock LP. The acquisition is expected to elevate Occidental's production by 5%, reaching approximately 1.32 million barrels of oil equivalent per day in 2024, with increased output primarily sourced from the Permian Basin. Capital expenditures will also rise by around 6%, bringing the total to $6.9 billion. This acquisition expands Occidental's presence in the Midland area of the Permian by about 25% and significantly boosts its output from the eastern section of the basin. The deal is seen as a strategic move to enhance the company's asset portfolio, which CEO Vicki Hollub describes as "the best in the company's history." Importantly, the acquisition aligns new acreage with existing drilling sites, facilitating future development opportunities. The company reported strong second-quarter earnings of $1.03 per share, surpassing analyst expectations, driven by higher production and better midstream performance. Although shares initially surged by 2.1% in after-hours trading, they later retracted. In the context of transportation and energy logistics, this acquisition could have significant implications. By expanding production capabilities in key areas like the Permian Basin, Occidental is positioning itself to respond more efficiently to energy demands, especially given the ongoing shifts in global energy policies and increasing interests in domestic oil production. Enhanced oil output from strategically aligned properties can also streamline transportation logistics, reducing costs and environmental impacts. Thus, this acquisition not only bolsters Occidental's market position but also reflects broader trends towards optimizing operational efficiency in the energy sector.

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