Occidental Petroleum Is Making Sure It Doesn't Repeat Its Past Mistakes
Occidental Petroleum (NYSE: OXY) made a big splash last year, agreeing to buy CrownRock for $12 billion. It's primarily paying cash for the oil and gas producer, which is a concern. The oil company nearly went under in 2020 after buying Anadarko Petroleum in a cash-heavy deal the prior year.
The oil company is taking steps to ensure it doesn't repeat its past mistakes by selling assets before closing its CrownRock transaction. That should take some of the pressure off its balance sheet and reduce the risk of running into financial trouble again should oil prices unexpectedly slump.
Occidental Petroleum sealed a deal to buy CrownRock last December, agreeing to pay $12 billion in cash and stock for the Permian Basin-focused producer. The company initially planned to issue $9.1 billion of new debt to fund the deal and assume $1.2 billion of CrownRock's debt. That debt-heavy financing strategy echoed the path it took to fund its 2019 Anadarko deal, which nearly caused the company to go bankrupt when crude oil prices crashed in 2020.
Source Fool.com
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