A bidding war is breaking out over Anadarko Petroleum, with Occidental making an offer that it says is about a 20% premium to Chevron's deal announced earlier this month, a rare move not often seen in the U.S. oil industry.
Houston-based Occidental Petroleum Corp. said the proposed combination would bolster its position in the Permian Basin in Texas and New Mexico, where it is already the largest oil producer.
"We have been focused on Anadarko for several years because we have long believed that we are ideally positioned to generate compelling value from a combination with them," Occidental President and CEO Vicki Hollub said in a statement.
In this undated photo provided by Occidental Petroleum Corp., Occidental President and CEO Vicki Hollub poses for a photo. A bidding war is breaking out over Anadarko Petroleum, with Occidental making an offer that it says is about a 20% premium to Chevron's deal announced earlier this month, a rare move not often seen in the U.S. oil industry. (Occidental Petroleum Corp. via AP)
Occidental said in a letter to Anadarko's board on Wednesday that its bid is worth $76 per share in cash and stock and would give Anadarko shareholders $38 in cash and 0.6094 shares of Occidental stock for each Anadarko share.
Occidental puts the value of its proposal at $57 billion, including debt and book value of non-controlling interest. Chevron's deal was valued at $33 billion in cash and stock, or $50 billion including debt and book value of non-controlling interest.
The merger and rival bids are strong evidence that the Permian Basin is hot and only gaining potential as global supplies decline in the wake of sanctions in Venezuela and Iran, said Ryan Fitzmaurice, energy strategist at Rabobank.
"There's still a lot of runway out there in the Permian," Fitzmaurice said. "If people thought that the resource was dwindling or if the potential was becoming less, I don't think you would see these types of transactions."
The competitive bids also indicate that in some cases, it makes more sense to expand by swallowing up a competitor than to invest in traditional oil exploration.
"On the exploratory side, a lot of the easy stuff around the world has been already had," said Leo Mariani, managing director and equity research analyst with KeyBanc Capital Markets. "It's a difficult game, and it's a low probability game if you want to find really big pools of oil out there."
In a letter to Anadarko's board of directors, Hollub said Occidental made three proposals to acquire Anadarko since late March, and that each offer was significantly higher than what Anadarko accepted from Chevron. She said Occidental was surprised and disappointed that Anadarko didn't engage with Occidental on a previous proposal.
Anadarko said in a news release that its board of directors would carefully review Occidental's proposal to determine what course of action would be in the best interest of the company's stockholders. It said the board hasn't determined whether Occidental's proposal is superior to its merger agreement with Chevron.
Chevron, of San Ramon, California, did not respond to requests for comment.
It appears Occidental's management team didn't feel that they could negotiate successfully with the Anadarko board and management, so they took their proposal directly to shareholders, Mariani said.
"A lot of the energy executives know each other fairly well, and a lot of them have been at the same helm at the same companies for many years, so as a result, we tend not to see this type of hostile approach in the sector," Mariani said. "It's incredibly rare."
Occidental said it is looking to close on the deal during the second half of the year.
Shares of Anadarko Petroleum Corp. jumped 11.6% to close Wednesday at $71.40. Occidental slipped 0.6% and Chevron's shares declined 3%.
KYIV, Ukraine (AP) — A Ukrainian court on Friday ordered the detention of the country’s farm minister in the latest high-profile corruption investigation, while Kyiv security officials assessed how they can recover lost battlefield momentum in the war against Russia.
Ukraine’s High Anti-Corruption Court ruled that Agriculture Minister Oleksandr Solskyi should be held in custody for 60 days, but he was released after paying bail of 75 million hryvnias ($1.77 million), a statement said.
Ukraine’s National Anti-Corruption Bureau suspects Solskyi headed an organized crime group that between 2017 and 2021 unlawfully obtained land worth 291 million hryvnias ($6.85 million) and attempted to obtain other land worth 190 million hryvnias ($4.47 million).
Ukraine is trying to root out corruption that has long dogged the country. A dragnet over the past two years has seen Ukraine’s defense minister, top prosecutor, intelligence chief and other senior officials lose their jobs.
That has caused embarrassment and unease as Ukraine receives tens of billions of dollars in foreign aid to help fight Russia’s army, and the European Union and NATO have demanded widespread anti-graft measures before Kyiv can realize its ambition of joining the blocs.
In Ukraine's capital, doctors and ambulance crews evacuated patients from a children’s hospital on Friday after a video circulated online saying Russia planned to attack it.
Parents hefting bags of clothes, toys and food carried toddlers and led young children from the Kyiv City Children’s Hospital No. 1 on the outskirts of the city. Medics helped them into a fleet of waiting ambulances to be transported to other facilities.
In the video, a security official from Russian ally Belarus alleged that military personnel were based in the hospital. Kyiv city authorities said that the claim was “a lie and provocation.”
Kyiv Mayor Vitali Klitschko said that civic authorities were awaiting an assessment from security services before deciding when it was safe to reopen the hospital.
“We cannot risk the lives of our children,” he said.
Meanwhile, Ukrainian President Volodymyr Zelenskyy was due to hold online talks Friday with the Ukraine Defense Contact Group, which has been the key international organization coordinating the delivery of weapons and other aid to Ukraine.
Zelenskyy said late Thursday that the meeting would discuss how to turn around Ukraine’s fortunes on the battlefield. The Kremlin’s forces have gained an edge over Kyiv’s army in recent months as Ukraine grappled with a shortage of ammunition and troops.
Russia, despite sustaining high losses, has been taking control of small settlements as part of its effort to drive deeper into eastern Ukraine after capturing the city of Avdiivka in February, the U.K. defense ministry said Friday.
It’s been slow going for the Kremlin’s troops in eastern Ukraine and is likely to stay that way, according to the Institute for the Study of War. However, the key hilltop town of Chasiv Yar is vulnerable to the Russian onslaught, which is using glide bombs — powerful Soviet-era weapons that were originally unguided but have been retrofitted with a navigational targeting system — that obliterate targets.
“Russian forces do pose a credible threat of seizing Chasiv Yar, although they may not be able to do so rapidly,” the Washington-based think tank said late Thursday.
It added that Russian commanders are likely seeking to advance as much as possible before the arrival in the coming weeks and months of new U.S. military aid, which was held up for six months by political differences in Congress.
While that U.S. help wasn’t forthcoming, Ukraine’s European partners didn’t pick up the slack, according to German’s Kiel Institute for the World Economy, which tracks Ukraine support.
“The European aid in recent months is nowhere near enough to fill the gap left by the lack of U.S. assistance, particularly in the area of ammunition and artillery shells,” it said in a report Thursday.
Ukraine is making a broad effort to take back the initiative in the war after more than two years of fighting. It plans to manufacture more of its own weapons in the future, and is clamping down on young people avoiding conscription, though it will take time to process and train any new recruits.
Jill Lawless contributed to this report.
Follow AP’s coverage of the war in Ukraine at https://apnews.com/hub/russia-ukraine
Ukrainian young acting student Gleb Batonskiy plays piano in a public park in Kyiv, Ukraine, Thursday, April 25, 2024. (AP Photo/Francisco Seco)
