Occidental Petroleum (NYSE: OXY) announced on Thursday that the approval delay from the Federal Trade Commission (FTC) for the $12 billion acquisition of shale producer CrownRock has resulted in a postponement of the deal’s closing date to the second half of this year.
CEO Vicki Hollub highlighted that the regulator’s second request for information regarding the deal will necessitate Occidental (OXY) to defer planned asset sales ranging between $4.5 billion to $6 billion and any potential alterations in the company’s buyback program.
Hollub mentioned during the post-earnings conference call that some teams within the company felt overwhelmed by the extensive nature of the Federal Trade Commission’s requests.
While Occidental (OXY) expressed willingness to sell non-core Permian Basin assets, this action will be deferred until after the CrownRock acquisition concludes.
Despite concerns that the delay in the CrownRock closing and the company’s stagnant production outlook might overshadow Occidental’s better-than-expected Q4 results, the stock surged by 4.9% on Thursday, reaching its highest level in six weeks.
Key points
- Federal Trade Commission Delay: The Federal Trade Commission’s delay in approving the acquisition has pushed back the closing date of the deal to the latter half of the year, impacting Occidental’s strategic plans and financial timelines.
- Postponed Asset Sales: Occidental had planned to sell assets worth $4.5 billion to $6 billion, but these sales are now postponed due to the delay in the acquisition process, affecting the company’s financial restructuring.
- Buyback Program: Changes in the company’s buyback program are also postponed as a result of the FTC’s prolonged scrutiny, indicating a shift in Occidental’s immediate financial strategies.
- Challenges with FTC Requests: CEO Vicki Hollub mentioned that some teams within Occidental felt overwhelmed by the extensive requests from the FTC, indicating the complexity and depth of the regulatory scrutiny.
- Future Asset Sales: Occidental remains open to selling non-core Permian Basin assets but has decided to defer this action until after the CrownRock acquisition concludes, showing a shift in the company’s immediate priorities.
- Market Response: Despite concerns among analysts regarding the delay and the company’s production outlook, Occidental’s stock saw a significant increase, indicating investor confidence and possibly underscoring optimism about the deal’s eventual closure and its impact on the company’s prospects.
About Occidental Petroleum
Occidental Petroleum is a multinational energy firm that possesses assets primarily situated in the United States, the Middle East, and North Africa. It stands as one of the foremost oil producers in the U.S., with significant operations in the Permian and DJ basins as well as offshore in the Gulf of Mexico. Through its midstream and marketing division, Oxy ensures smooth flow and enhances the value of its oil and gas products.
OxyChem, its chemical subsidiary, manufactures essential components for products that enrich lives. Additionally, its subsidiary, Oxy Low Carbon Ventures, is dedicated to promoting innovative technologies and business strategies that foster business growth while curbing emissions. The company is dedicated to leveraging its global expertise in carbon management to promote a more sustainable world.
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