Occidental Petroleum (NYSE: OXY) has struck a deal to acquire privately held oil and natural gas producer CrownRock for $12 billion. The deal will bolster its position in the oil-rich Permian Basin. It will also increase the company's cash flow, giving it more fuel to pay dividends.

The deal is the latest in a wave of mergers in the oil patch as Occidental looks to keep pace with larger rivals ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX). However, there's one notable difference between this purchase and the deals made by its peers -- a difference that could haunt the energy company in the future.

Occidental Petroleum is acquiring CrownRock in a cash-and-stock deal. CrownRock controls more than 94,000 acres in the Midland Basin side of the Permian, where it produces about 170,000 barrels of oil equivalent per day (BOE/d) of high-margin oil. Occidental's management expects the purchase will increase its free cash flow by $1 billion next year, assuming oil averages $70 a barrel, which is right around the current price.

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Source Fool.com