Thursday, January, 23, 2020 05:29:39

However analysts are of the opinion that the decision to be at loggerheads with a supermajor four times the size of Occidental is not a very good decision.

Occidental Petroleum Corp., the hydrocarbon exploration company, recently started a takeover competition with Chevron Corp. regarding the acquisition of Anadarko Petroleum Corp.

Reliable sources report that this is the first such bid made in several years by Occidental for the acquisition of a major petroleum company as it offered $38 billion against Chevron’s offer of $33 billion.

Both companies are offering a premium price with an intention to acquire holdings of Anadarko in the Permian Basin in West Texas and New Mexico. The shale fields in the Permian Basin are reported to hold vast deposits of oil and gas that can be utilized for decades with the use of low-cost and innovative drilling techniques.

Occidental offered to pay $76-per-share which is significantly above Chevron’s offer of $65-per-share and pegs the valuation of Anadarko holdings at $57 billion, including debt verses the $50 billion valuation made by Chevron. The deal between Occidental and Anadarko, if concluded, will be the fourth-largest in terms of oil production.

Anadarko has been reported to have received the bid but has reaffirmed its recommendation of a sale to Chevron as Anadarko is yet to determine the bid by Occidental as a “superior proposal”.

Kent Robertson, Chevron spokesman expressed confidence in the company’s transaction with Anadarko and said that the deal will be concluded. Occidental on the other hand raised the stakes by offering to boost cash portion of its offer to 50% while Chevron has offered a cash portion of 25% and stock portion of 75%.

According to analysts, a deal between Occidental and Anadarko will add almost a quarter million acres in the Permian shale basin to the holdings of the former while doubling its global production to 1.4 million barrels of oil and gas per day.

However analysts are of the opinion that the decision to be at loggerheads with a supermajor four times the size of Occidental is not a very good decision. The general lack of confidence in the deal has also been reflected in the fact that Occidental lost more than 7% of its value once the decision to acquire Anadarko was revealed.

Source Credit: https://www.reuters.com/article/us-anadarko-petrol-m-a-occidental/occidental-offers-to-buy-anadarko-in-57-billion-deal-topping-chevron-idUSKCN1S01DF