Here are all the details behind the mega Oxy-Anadarko deal

[Elderberry]

Houston Chronicle by Jordan Blum June 7, 2019

Oxy's pursuit of Anadarko - two years in the making

Occidental Petroleum's pending $38 billion acquisition of Anadarko Petroleum is a nearly two-year tale of Oxy's pursuit and repeated rejection until, in May, when the two Houston-area firms finally agreed to merge.

The companies revealed Friday in a filing with the U.S. Securities and Exchange Commission that the affair was an on again, off again flirtation until February when Chevron entered the fray and quickly wooed Anadarko into a short-lived engagement. The biggest desired prize was Anadarko's prime acreage in West Texas' booming Permian Basin, where Oxy and Chevron already are the top producers.

An increasingly tense series of back-and-forth talks continued until the seemingly dramatic conclusion on April 11 when - after a night of long discussions - The Woodlands-based Anadarko agreed to a lesser but potentially safer offer from the California oil giant.

That set in motion a whirlwind bidding war that would ultimately result in Anadarko changing course and Oxy winning out in the end with a deal that included an 80 percent cash stake, an influx of funds from Warren Buffett and an agreement to sell Anadarko's Africa assets to the French energy major Total.

Houston-based Oxy is taking a big bet and assuming about $40 billion in new debt through the deal. By its own recognition, "Occidental will incur a substantial amount of indebtedness and other payment obligations in connection with the financing for the merger."

Oxy Chief Executive Vicki Hollub has said her senior vice president, Michael Ure, identified Anadarko as an ideal takeover candidate two years ago, praising the mergers and acquisitions team that made it happen.

What follows is a play-by-play as detailed in the SEC filing.

Hollub first contacted Anadarko CEO Al Walker about a potential deal in July 2017.

They met in August and continued the conversation in September 2017, initially offering close to $31 billion in an all-stock deal when the energy sector was still recovering from the most recent oil bust.

In October, Walker told Hollub he questioned the logic of deal because of the "significant differences in the two companies' asset profiles and strategies." And, in November, Oxy offered to make the deal a mix of cash and stock.

The Anadarko board met in mid-November 2017 to discuss the deal and unanimously decided to reject it, concluding that the companies' differing strategies wouldn't optimize shareholder value and that the financial risks could make it difficult for Oxy to increase or even maintain dividend payouts to investors. The board also was concerned Oxy would have to sell off a lot of Anadarko for parts in a difficult market environment in order to finance the deal.

Undeterred, in January 2018 as oil prices rebounded above $60 per barrel and the valuations of energy companies rose, Oxy made a new cash-and-stock offer of about $38 billion with up to half of the funds in cash, valuing Anadarko at about $76 per share. That offer ended up being nearly as high as the one Anadarko would ultimately accept 16 months later.

At the time, Anadarko stock was selling for more than $58 per share with a total Wall Street value of almost $30 billion.

Confident in a rebounding oil market and Anadarko's ability as a standalone company, the board again rejected the offer in February 2018.

But Walker told Hollub that an all-cash offer may win them over.

Throughout the rest of 2018, Hollub informally conveyed Oxy's ongoing interest to Walker, but any formal negotiations went dormant.

Things went quiet until February 2019 when Chevron abruptly stepped in.

More: https://www.houstonchronicle.com/business/energy/article/Oxy-s-pursuit-of-Anadarko-two-years-in-the-13957217.php

[IsailedawayfromFR]

Only time will tell whether the merger was a good one for Oxy.  It certainly was for Buffett and Anadarko shareholders.

Will take several years to find out, sooner if crude prices rise, which looks doubtful for the near term.

Having participated in many oil industry purchases over the years one thing is certain:  Oxy will rely upon its Permian holdings for its operational cashflow, so look forward to increased rig count to fiscalize the perceived value of the deal.

[Elderberry]

Romancing the shale: How Oxy won over Anadarko

https://www.houstonchronicle.com/business/energy/article/Romancing-the-shale-How-Oxy-won-over-Anadarko-13961500.php

Houston Chronicle by  Jordan Blum June 7, 2019

Occidental Petroleum’s pending $38 billion acquisition of Anadarko Petroleum is a tale of nearly two years of unrequited love, a Jane Austen-type romance of proposals and rejections, disappointment and jealousy, until a determined suitor ultimately bests a rival and wins over the object of desire, culminating in matrimony.

The two companies, in a regulatory filing, on Friday revealed the details of their on-again, off-again flirtation — a flirtation that was disrupted when the California energy major Chevron made its own proposal to Andarko. The filing describes the increasingly tense series of back-and-forth talks between Anadarko and its two pursuers that continued until the seemingly dramatic conclusion of April 11 when — after a night of long discussions — The Woodlands-based Anadarko agreed to a lesser, but potentially safer offer from Chevron.

The documents recount the whirlwind bidding war that followed as Occidental executives jetted from Houston to Paris to Omaha, Neb. to make the deals that would allow Oxy to up its cash offer to nearly 80 percent of the purchase price and gain the consent of Anadarko’s board. As Oxy CEO Vicki Hollub said the company’s annual meeting last month, “We were not going to let it be taken away.”

The filing also disclosed that Anadarko CEO Al Walker, who has led the company since 2012, will walk away with severance package of $98 million when the merger is completed, part of $300 million to be shared among Anadarko’s six senior executives. Here is how it all unfolded:

The summer of ’17

Hollub first contacted Walker about a potential sale in July 2017. They met in August and continued the talks into September 2017, when Oxy offered close to $31 billion in an all-stock deal.

In October, Walker told Hollub he questioned the logic of a deal. Hollub responded by offering a mix of cash and stock.

The Anadarko board met in mid-November 2017 to discuss the deal and unanimously rejected it, concluding that it wouldn’t boost shareholder value and the financial risks that Oxy would take on could make it difficult for Oxy to increase or even maintain dividends to investors.

Undeterred, Oxy made another cash-and-stock offer in January 2018, upping its bid to about $38 billion with up to half of the funds in cash. That valued Anadarko at about $76 per share. At the time, Anadarko stock was selling for more than $58 per share with a stock market value of almost $30 billion.

But with oil prices rising and confident in Anadarko's future as as a standalone company, the board again rejected the offer in February 2018. Walker, however, let Hollub know all was not lost: an all-cash offer might still win over the board.

Throughout the rest of 2018, Hollub conveyed Oxy’s ongoing interest to Walker, but formal negotiations went dormant. All stayed quiet — until February.

More at link.