HOUSTON, TEXAS – Occidental Petroleum has made a deal to acquire CrownRock, a prominent private shale oil producer based out of the United States. The deal, valued at around $12 billion, including debt, comes after Occidental Petroleum beat out other contenders seeking to acquire CrownRock’s assets.

Large energy companies have been seeking to capitalize on their strong financial standing to acquire smaller rivals in the oil and gas sector. ExxonMobil and Chevron have also made significant deals in the industry this year.

With this new acquisition, Occidental Petroleum will solidify its position as the second-largest player in the prolific Permian Basin in the US southwest, as it intends to take on $9.1 billion in new debt to fund the deal. However, the company plans to sell non-core assets and use excess cash to pay down the debt.

The deal is expected to generate about $1 billion in free cash flow in its first year, based on the US oil price remaining at $70 a barrel, along with approximately 170,000 barrels of oil equivalent a day. Occidental Petroleum’s stock price has risen nearly 500% since reaching a 20-year low during the 2020 oil market upheaval.

Acquiring CrownRock will provide Occidental Petroleum the opportunity to build scale in the Midland Basin and drive value creation for its shareholders. CrownRock is known for its increased production since 2019 and is led by prominent conservative political donor, Tim Dunn.

The acquisition will bring major changes in the US shale oil industry and establish Occidental Petroleum as a major player in the market. With the ongoing rebound in oil prices, the closing of this deal will reshape and strengthen the company’s position in the industry.