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The ongoing battle for Anadarko Petroleum (NYSE: APC) & nbsp; saw another turning point Tuesday, April 30 after investor-billionaire Warren Buffett came into conflict with Occidental Petroleum (NYSE: OXY). Through his investment company Berkshire Hathaway (NYSE: BRK.A), Buffett announced that he would invest $ 10 billion in Occidental, because of the success of his hostile offer on Anadarko , which had initially agreed to be acquired by the large Chevron oil group (NYSE: CVX).
It all began on April 12, after the company accepted Chevron's $ 33 billion bid on Anadarko. At the time, rumor had it that Anadarko would be in talks with Occidental, but that Wall Street would be welcomed by the news of the success of Chevron's offer. What appeared to be an agreement was shaken again on April 24 after Vicki Hollub, CEO of Occidental, unveiled his fourth attempt to acquire Anadarko for 38 billion dollars.
The devil is in the daring details. Hollub offered to pay about 17% more than Chevron had agreed to pay for Anadarko, $ 76 per share in cash and stock. With the assumption of Anadarko's debt, the offer appears to be worth $ 57 billion; about 20% more than the Chevron offer.
Pumpjacks in a Permian Oilfield near Lovington, New Mexico: The Big Oil Shale Concession Run in the Exploration Area is just starting, as illustrated by the takeover of Anadarko Petroleum & Photo (Photo: Charlie Riedel / Associated Press)
There could be even more twists in & nbsp; this saga. This is an oil market that has not witnessed a fierce war between the big oil companies in recent years. The three largest acquisitions in the industry – ConocoPhillips and Burlington, ExxonMobil and XTO Energy, and more recently Royal Dutch Shell and BG & nbsp;– were inked without much drama.
The fight for Anadarko, if Chevron chooses to climb it, is at least financially favorable. It is the second largest US oil company, just behind ExxonMobil (NYSE: XOM) and the 10th largest international producer of oil and gas in volume. In terms of market capitalization, at the close of Monday (April 29), Chevron & nbsp; remained five times greater than the Westerner, regardless of Buffett's approval.
At the heart of this somewhat unequal struggle is the domination of the Permian Basin, which is indeed a witness of a decisive moment. The largest oilfield in the United States & nbsp; extends over parts of western Texas and southeastern New Mexico; an area that is now more and more watched by the oil majors.
The 250,000 net acres of Anadarko located in the Permian would happily occupy the 2.2 million net acres that Chevron holds in the basin, but Occidental hopes that they will expand their portfolios equally and for a further year. good reason. & Nbsp; About one-third of the US's total oil production, currently running at 12 million barrels per day (bpd), comes from the Permian. Not only Chevron; ExxonMobil, Royal Dutch Shell and BP have all invested in in the last five years.
The potential for export of oil produced in the Permian via ports in the Gulf of Mexico is expected to be multiplied by at least three, reaching 7 to 8 million bpd, once 10 construction projects and enlargement pipeline will have been completed by the second quarter of 2020.
Currently, 110 freelancers operate more than 400 platforms in the Permian, many of which have distress balances, & nbsp; leaving it to Big Oil & nbsp; no potential target. Clearly, larger independent Permian chains such as Concho Resources (NYSE: CXO), Diamondback Energy (NASDAQ: FANG), Endeavor Energy Resources (limited liability company), Parsley Energy (NYSE: PE) and Pioneer Natural Resources (NYSE: PXD)) could be potential supply targets.
There is also an outside chance, Shell or ExxonMobil could still enter the fray for Anadarko. And many Wall Street believe that Occidental's willingness to acquire Anadarko may well be tied to the protection of his own home as an independent, since his impressive Permian portfolio could make it an attractive target for a more great rival. One thing is clear: the Big Oil race for the Permian area and the shale plays beyond is now clearly visible & nbsp; this quest is just beginning.
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The current battle for Anadarko Petroleum (NYSE: APC) went another round on Tuesday, April 30 after billionaire investor Warren Buffett came into conflict with Occidental Petroleum (NYSE: OXY). Through his investment company Berkshire Hathaway (NYSE: BRK.A), Buffett announced that he would invest $ 10 billion in Occidental, because of the success of his hostile offer on Anadarko , which had initially agreed to be acquired by the large Chevron oil group (NYSE: CVX).
It all began on April 12, after the company accepted Chevron's $ 33 billion bid on Anadarko. At the time, rumor had it that Anadarko would be in talks with Occidental, but that Wall Street would be welcomed by the news of the success of Chevron's offer. What appeared to be an agreement reached was shaken again on April 24 after Vicki Hollub, the Western CEO, unveiled his fourth attempt to acquire Anadarko for $ 38 billion.
The devil is in the daring details. Hollub offered to pay about 17% more than Chevron had agreed to pay for Anadarko, $ 76 per share in cash and stock. With the assumption of Anadarko's debt, the offer appears to be worth $ 57 billion; about 20% more than the Chevron offer.
Pumpjacks in a Permian Oilfield near Lovington, New Mexico: The Big Oil Shale Concession Run in the Exploration Area is just beginning, as illustrated by the fight for the taking of control of Anadarko Petroleum (Photo: Charlie Riedel / Associated Press)
There could be even more twists in this saga. This is an oil market that has not witnessed a fierce war between the big oil companies in recent years. The three largest acquisitions in the industry – ConocoPhillips and Burlington, ExxonMobil and XTO Energy, and more recently Royal Dutch Shell and BG – were inked without much drama.
The fight for Anadarko, if Chevron decided to climb it, is at least financially favorable to him. It is the second largest US oil company, just behind ExxonMobil (NYSE: XOM) and the 10th largest international producer of oil and gas in volume. In terms of market capitalization, at the close of Monday (April 29), Chevron remained five times larger than Western, regardless of Buffett's downstream.
At the heart of this somewhat unequal struggle is the domination of the Permian Basin, which is indeed a witness of a decisive moment. The largest oilfield in the United States extends over parts of western Texas and southeastern New Mexico; an area that is now more and more watched by the oil majors.
The 250,000 net acres of Anadarko in the Permian would be located next to the 2.2 million net acres that Chevron holds across the basin, but Occidental wants them to expand their portfolio too and for good reason. About one-third of total US oil production, currently just under 12 million barrels per day (bpd), comes from the Permian. Not only Chevron; ExxonMobil, Royal Dutch Shell and BP have all invested in the last five years.
The potential for export of oil produced in the Permian via ports in the Gulf of Mexico is expected to be multiplied by at least three, reaching 7 to 8 million bpd, once 10 construction projects and enlargement pipeline will have been completed by the second quarter of 2020.
Currently, 110 freelancers operate more than 400 platforms in the Permian, many of which have distressed balance sheets, leaving Big Oil with no shortage of potential targets. Clearly, larger independent Permian chains such as Concho Resources (NYSE: CXO), Diamondback Energy (NASDAQ: FANG), Endeavor Energy Resources (limited liability company), Parsley Energy (NYSE: PE) and Pioneer Natural Resources (NYSE: PXD)) could be potential supply targets.
There is also an outside chance, Shell or ExxonMobil could still enter the fray for Anadarko. And many Wall Street believe that Occidental's willingness to acquire Anadarko may well be tied to the protection of his own home as an independent, since his impressive Permian portfolio could make it an attractive target for a more great rival. One thing is clear: the Big Oil race for the Permian and the shale games beyond is now clearly visible and this quest is just beginning.