Occidental makes US$38bn rival bid for Anadarko
Occidental Petroleum today put forward a rival bid to acquire Anadarko Petroleum for US$38 billion, surpassing Chevron's US$33 billion offer earlier this month.
Occidental proposes paying US$76 per share, roughly 20% more than Chevron's earlier offer of US$65 per share.
Zoe Sutherland, corporate analyst at Wood Mackenzie, said: "The proposed deal would put Occidental alongside ConocoPhillips in a peer group of two, as a ‘super-independent’.
"The deal underscores Occidental's need to scale up in the Permian basin. If the deal goes through, it would give the company ExxonMobil or Chevron-like Permian scale, and set them up to join the million barrels of oil equivalent per day Permian club in the late 2020s, according to our base case.
"The deal highlights that diversity is still valued by US independents, and would mark Occidental's entry into deepwater Gulf of Mexico and LNG."
She added: "Financially, the deal would be a big stretch for Occidental. Its gearing ratio at the end of the fourth quarter was 25%. A potential transaction would materially increase the company's leverage ratios, and stretch its balance sheet."
Ms Sutherland said that Occidental's enhanced oil recovery (EOR) skills could unlock value from the expanded opportunity set. "Occidental has a fantastic track record for EOR, and is currently the largest carbon dioxide injector in the Permian basin," she added.
"In addition, Occidental has a track record of operating in areas of high geopolitical risk. It is less likely to divest the Algeria and Ghana components of Anadarko's portfolio."