The $10 billion of debt lined up for Occidental Petroleum Corp.’s takeover of Texas shale driller CrownRock LP is sizing up to be one of the largest bridge financing deals of the year — and a crucial test for the energy giant, Bloomberg News reported. Just months after regaining its investment-grade credit rating, the Houston-based oil and gas producer agreed to a $10.8 billion transaction to expand its business in the Permian Basin. As part of the deal, it committed to pay about $9.1 billion in cash, funded via a temporary bridge loan from Bank of America that will likely be replaced with bonds and term loans. That comes in sharp contrast to the financing for other transactions inked this year targeting assets in North America’s most-prolific oil basin. While Chevron Corp.’s purchase of PDC Energy Inc. and Exxon Mobil Corp.’s acquisition of Pioneer Natural Resources Co. both relied on equity markets for financing, Occidental plans to sell only $1.7 billion of new shares. In a company presentation, Occidental laid out a strategy to pay down at least $4.5 billion of debt within a year of the transaction’s close, saying it would sell up to $6 billion in assets. The company will also assume $1.2 billion in debt held by CrownRock, as per the deal’s terms.
