I'm listening to CNBC, and they just mentioned an analyst that noticed an Oxy plane traveling to Omaha this weekend and predicted Berkshire investing. Guess Texags isn't the only site using flight aware.

cgh1999 said:

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I'm listening to CNBC, and they just mentioned an analyst that noticed an Oxy plane traveling to Omaha this weekend and predicted Berkshire investing. Guess Texags isn't the only site using flight aware.

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Vicki continues to cement her legacy.

April 30 (Reuters) - Occidental Petroleum Corp said on Tuesday that Warren Buffett's Berkshire Hathaway Inc would invest $10 billion in the U.S oil and gas company to help fund its acquisition of smaller rival Anadarko Petroleum Corp .

Reuters Link re: Berkshire Hathaway

Good deal for Berkshire.

Does this effectively kill the Chevron bid? Why would OXY need to secure this much cash in order to complete the deal?

Looks like Chevron may back away now.

This surprises me that they don't block their tail number. Most companies block them now so that people can't track this for this very purpose. Very interesting.

Chevron will not get into a bidding war. Also it is my understand that Anadarko management have already their pay scale to be aligned with Chevrons structure in anticipation of the acquisition. I would think that this change sends a clear message to the stakeholders that management is on board

Also World Oil seems to think Chevron is a better fit

World Oil: Chevron vs. Oxy: Who fits Anadarko better?

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So, back to the question at handwho is the better fit? The early consensus among analysts is that Chevron is the more natural fit. As Chevron Chairman Michael Wirth noted on April 12, "This transaction builds strength on strength for Chevron. The combination of Anadarko's premier, high-quality assets with our advantaged portfolio strengthens our leading position in the Permian, builds on our deepwater Gulf of Mexico capabilities and will grow our LNG business (via Anadarko's Mozambique activity)."

More specifically, as relates to shale and tight resource assets, Chevron says that its combination with Anadarko will create a 75-mi-wide corridor across the most attractive acreage in the Delaware basin, extending the firm's position as a leading Permian producer. In the deepwater arena, Chevron says this combination will enhance its existing high-margin position in the Gulf of Mexico, where it again is a leading producer and has an extensive deepwater infrastructure. And regarding LNG, Anadarko will bolster Chevron's goal to build its LNG business by bringing a "world-class resource base" in Mozambique. It also should be noted that Chevron will not be intimidated by taking on Anadarko's assets in now over-regulated Colorado, since the company already has a significant presence there.

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Quote:

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Looking at Occidental, one sees a vastly different operation than Chevron. The company has deliberately concentrated all of its U.S. activity in the Permian basin, within Texas and New Mexico. And its international activity is concentrated in a handful of countriesColombia, plus Oman, Qatar and the UAE. Ironically, Anadarko is active in twice as many states in the U.S., plus the Gulf of Mexico, and it has operations/interests in roughly twice as many countries as Oxy, including three in South America and four in Africa.

Oxy President and CEO Vicki Hollub said on Wednesday that "Occidental is a leader in using technological innovation to create value, and we will deploy our expertise to enhance the performance and productivity of Anadarko's assets, not only in the Permian but globally." And yet, one has to question the "global" part of that statement. Sure, it's easy to see in the Permian why Oxy wants to acquire Anadarkosuch a transaction, according to Hollub, would create a combined company that would be the largest producer in the Permian, at 533,000 boed. Right now, looking at the comparative table ("Comparing the Anadarko suitors") on this page that World Oil has assembled, Oxy produces 330,000 boed in the Permian, representing half of its total global output. By comparison, another 127,000 boed (4Q, 2018) from Anadarko would boost Chevron's Permian output to close to Oxy's level.
On a Permian acreage basis, one can see easily why Oxy would want to keep Chevron from acquiring Anadarko's roughly 600,000 acres. Add that number to Chevron's 2.2 MM acres, and the total swells to 2.8 MM acres, 100,000 more than the current Oxy holdings. On the other hand, if Oxy acquires Anadarko, the firm then takes a commanding acreage position in the Permian, at 3.3 MM acres.
But when one looks beyond the Permian, the case for Oxy acquiring Anadarko becomes less compelling. Going back to the Colorado situation, Oxy would have to reintroduce itself to that state and all the recent regulatory hassles that have materializeddoes the company really want to take this on? Second, as regards the Gulf of Mexico, Oxy has steadfastly stayed out of the offshore sector in recent years, and the firm was very happy to rid itself of properties offshore California, when it spun off California Resources Corporation a few years back (Chevron remains one of California's leading onshore producers). And third, Oxy would have to introduce itself to the LNG sectorcome to think of it, Oxy's press release for the latest offer to Anadarko, as well as Hollub's comments, did not mention Mozambique once.

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Chevron can fold in the various assets in a manner that creates value, atleast value as it relates to a super major. I imagine Oxy is going to have to sell of the GOM, LNG and other onshore L48 assets to reduce leverage and stay within the "technical" scale.

The A&D market is still soft so they're going to have to cross the bid ask again and will likely not achieve full value. When you add in the BH 8% pref equity with warrant coverage, this is expensive for an Oxy shareholder.

I'm wondering if Buffet really wants the deal to work or if he's in it for some sort of breakage fee when/if Chevron wins. Obviously he wins either way, he's selling his endorsement as much as he's financing a deal. Oxy can get better financing terms than that.

From the outside looking in, Chevron makes a lot more sense. Gotta think they'll win it unless Oxy bids something stupid, and I don't think Buffett would risk his money if the bid were stupid.

Chevron looks to be better with AD's LNG and such. Since Chevron already owns/runs LNG plants, it is just additional capacity they get to 'play' with, among the other aspects of the deal.

I see OXY as wanting some parts of AD, but not the rest (upstream, not the downstream).

~egon

Dr. Doctor said:

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Chevron looks to be better with AD's LNG and such. Since Chevron already owns/runs LNG plants, it is just additional capacity they get to 'play' with, among the other aspects of the deal.

I see OXY as wanting some parts of AD, but not the rest (upstream, not the downstream).

~egon

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1) Buy APC
2) Sell APC LNG assets to CVX
3) ????
4) Profit (or pay down the debt)

Disclaimer:
Yes, I know this is highly likely to never happen...

https://www.cnbc.com/2019/05/03/carl-icahn-takes-stake-in-occidental-amid-bidding-war-for-anadarko.html

Looks like Vicki just made Chevron her *****. She's put them in a position to go home with their tail tucked or pay way more than they wanted to.

She out maneuvered Anadarko and Chevron badly on this deal financially and in public relations. They may still not get it, but she isn't going to be the loser in this deal regardless.

GE said:

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AgLA06 said:

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Looks like Vicki just made Chevron her *****. She's put them in a position to go home with their tail tucked or pay way more than they wanted to.

She out maneuvered Anadarko and Chevron badly on this deal financially and in public relations. They may still not get it, but she isn't going to be the loser in this deal regardless.

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If getting a free billion is being made a ***** I wish someone would do it to me

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This is like a normal person trying to sell a food cart business for $50k and getting played by a rival business that "kicked the tires" for everything but the $500 earnest money. Yah, you got $500 bucks for all the due diligence, marketing, and paperwork, but it ain't doing much for your p&l in the next quarter and now everyone has doubts.

Not exactly apples to apples, but same outcome proportionally.

AgLA06 said:

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GE said:

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AgLA06 said:

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Looks like Vicki just made Chevron her *****. She's put them in a position to go home with their tail tucked or pay way more than they wanted to.

She out maneuvered Anadarko and Chevron badly on this deal financially and in public relations. They may still not get it, but she isn't going to be the loser in this deal regardless.

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If getting a free billion is being made a ***** I wish someone would do it to me

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This is like a normal person trying to sell a food cart business for $50k and getting played by a rival business that "kicked the tires" for everything but the $500 earnest money. Yah, you got $500 bucks for all the due diligence, marketing, and paperwork, but it ain't doing much for your p&l in the next quarter and now everyone has doubts.

Not exactly apples to apples, but same outcome proportionally.

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Chevron does not need this deal and $1bn is a lot of money even to Chevron. Equity investors will appreciate their management teams patience if they avoid a bidding war. Oxy is the side acting irresponsibly and apparently desperate.

Goose06 said:

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AgLA06 said:

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GE said:

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AgLA06 said:

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Looks like Vicki just made Chevron her *****. She's put them in a position to go home with their tail tucked or pay way more than they wanted to.

She out maneuvered Anadarko and Chevron badly on this deal financially and in public relations. They may still not get it, but she isn't going to be the loser in this deal regardless.

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If getting a free billion is being made a ***** I wish someone would do it to me

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This is like a normal person trying to sell a food cart business for $50k and getting played by a rival business that "kicked the tires" for everything but the $500 earnest money. Yah, you got $500 bucks for all the due diligence, marketing, and paperwork, but it ain't doing much for your p&l in the next quarter and now everyone has doubts.

Not exactly apples to apples, but same outcome proportionally.

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Chevron does not need this deal and $1bn is a lot of money even to Chevron. Equity investors will appreciate their management teams patience if they avoid a bidding war. Oxy is the side acting irresponsibly and apparently desperate.

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Offering 50 billion dollars doesn't exactly have the appearance of an unimportant deal. Even for an Exxon or Chevron. I mean considering your premise of a billion being a lot for them.

They thought they had this deal done except for the announcement. Oxy has blown that up and at the minimum is going to make it anything but a value buy at this point. Losing a deal like this at this point to anyone other than Exxon doesn't look good for Chevron management.

https://www.cnn.com/2019/05/01/investing/oil-deal-occidental-anadarko/index.html

All that is possible, but it will be interesting to see if they can make all this happen without a shareholder vote. Current shareholders might not appreciate some of these deals being made, a la the article above.

If OXY wins or loses.... I'm going to say the current CEO will not be there a year from today.

Ballsy. Wheeling APC assets before a deal is done

https://www.cnbc.com/2019/05/05/occidental-inks-deal-to-sell-anadarkos-africa-assets-to-total.html

Has to get that off the books asap. I'm thinking more and more oxy wins this one

OXY just upped the cash portion to $59/shr... they def came to play

What do you want to play for?

Yep. CVX is going to have pay up or they'll lose this deal. Likelihood of Oxy getting shareholder approval and closing just went way up.

For APC employees this is bad news because CVX would have folded most of them into their organization. Oxy will cut as many as possible. Mozambique is a great example of that. Oxy will sell the asset and the APC project team is gone. CVX would have kept them.

LostInLA07 said:

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Yep. CVX is going to have pay up or they'll lose this deal. Likelihood of Oxy getting shareholder approval and closing just went way up.

For APC employees this is bad news because CVX would have folded most of them into their organization. Oxy will cut as many as possible. Mozambique is a great example of that. Oxy will sell the asset and the APC project team is gone. CVX would have kept them.

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OXY isn't going to cut people out of spite. That team has the working knowledge needed by whoever owns the asset. "Folding people in" just because isn't good business anywhere.

The length some of you are going to in to twist this negatively for OXY is entertaining.

I think you interpreted my post incorrectly. I guess you've never worked with Total.

jetch17 said:

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Ballsy. Wheeling APC assets before a deal is done

https://www.cnbc.com/2019/05/05/occidental-inks-deal-to-sell-anadarkos-africa-assets-to-total.html

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Imo an announcement like this is bush league and it seems a bit desperate to announce selling off assets before you have been even named the suitor. I could be wrong but seems a bit out of place

LostInLA07 said:

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I think you interpreted my post incorrectly. I guess you've never worked with Total.

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No I didn't.

Bag said:

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jetch17 said:

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Ballsy. Wheeling APC assets before a deal is done

https://www.cnbc.com/2019/05/05/occidental-inks-deal-to-sell-anadarkos-africa-assets-to-total.html

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Imo an announcement like this is bush league and it seems a bit desperate to announce selling off assets before you have been even named the suitor. I could be wrong but seems a bit out of place

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They're just showing their shareholders that they have a plan forward and are ready to execute on day one.

By sell those assets and upping the cash offerring, it doesn't matter what the shareholders think anymore