Occidental Petroleum Credit Agreement

Cravath represented JPMorgan Chase, N.A. Bank in connection with the $3 billion agreement to provide an unsecured five-year credit facility for Occidental Petroleum Corporation. On May 10, we negatively undervalued Occidental Petroleum`s A grade. This was done following the final merger agreement of 9 May, announced by Occidental Petroleum and Anadarko Petroleum (unvalued) for Occidental, in order to purchase Anadarko in a cash and equity transaction of 78%/22% under the terms of the revised proposal (5 May) of Occidental. On June 3, the U.S. Federal Trade Commission granted an early end to the wait time under the Hart-Scott-Rodino Act. Pending approval by Anadarko Occidental shareholders, the transaction is expected to close in the second half of 2019. The main drivers of Western`s short-term growth are the launch of oil and gas extraction from the company`s unconventional gas and cultivation projects in Al Hosn in the United Arab Emirates and Oman. From an operational perspective, Anadarko`s operations are located in the Delaware segment of the Perm Basin or near western facilities, which should create excellent synergies. In addition, Western will receive Anadarko`s portfolio of deepwater companies in the Gulf of Mexico, DJ Basin (Colorado) holdings and development of the Powder River Basin (Wyoming).

Western is not active in these areas. The upcoming sale of Anadarko`s African assets should allow Occidental to focus integration efforts on assets that the company considers to be the most valuable for its growth strategy. Including the stock of asset sales and the preferred capital contribution, both of which depend on the closing of the transaction, we expect the 12-month gross debt-to-TRAIL ratio to EBITDAX, 1.0 times on March 31 for the planned acquisition, to more than double to 2.3 times pro forma and exclude any potential synergy. The net leverage would increase from 0.9 times to 1.5 times pro forma. Occidental`s liquidity remains excellent and closes the March quarter with $1.8 billion in payment and equivalents and with total availability for its first unsecured credit facility of $3.0 billion (due in January 2023).

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