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The Big Oil mergers keep coming.
ConocoPhillips will buy Marathon Oil in an all-stock transaction valued at $22.5 billion, including $5.4 billion of net debt, the companies announced Wednesday. The deal will be “immediately accretive” to ConocoPhillips’ earnings, cash from operations, free cash flow and capital returns to shareholders.
“This acquisition of Marathon Oil further deepens our portfolio and fits within our financial framework, adding high-quality, low cost of supply inventory adjacent to our leading U.S. unconventional position,” said ConocoPhillips CEO Ryan Lance in a statement.
The acquisition will bolster ConocoPhillips’ onshore portfolio, adding over 2 billion barrels of resources, the company said. The transaction is expected to close in the fourth quarter of 2024, pending stockholder and regulatory approval.
ConocoPhillips was the second-largest producer of crude oil and natural gas liquids in the U.S. as of the third quarter of last year. Houston-based Marathon’s exploration and production efforts are focused in resource-rich areas across the country, including the Eagle Ford in Texas, Permian in New Mexico, STACK and SCOOP in Oklahoma, and the Bakken in North Dakota.
Under the agreement, Marathon Oil shareholders will receive 0.255 shares of ConocoPhillips common stock for each share of Marathon Oil common stock they hold. That’s a 14.7% premium to the closing share price of Marathon Oil as of May 28, and a 16% premium to the 10-day volume-weighted average price.
ConocoPhillips stock was down 2.25% in pre-market trading following the announcement. Marathon Oil shares rose almost 10%.
A spate of oil acquisitions
The deal, if approved, continues the momentum of mergers and acquisitions within the oil and gas sector that took off last year. In 2023, crude oil and natural gas exploration and production companies spent $234 billion on deals, the most (in real 2023 dollars) since 2012, according to the U.S. Energy Information Administration.
ExxonMobil announced its acquisition of Pioneer Natural Resources for $60 billion last October, a bid which was approved earlier this month. With the acquisition of Pioneer, ExxonMobil was set to be the largest crude oil and natural gas liquids producer in the country, with an estimated 16 billion barrels of oil equivalent worth of reserves in the Permian Basin, a highly lucrative area that accounts for almost 40% of U.S. oil production and nearly 15% of natural gas production.
Chevron’s $53 billion takeover of Hess Corporation was approved by Hess shareholders on Tuesday. A major driving force behind the acquisition was access to the Stabroek Block off the coast of Guyana — the largest oil discovery of the past decade. ExxonMobil, however, launched a legal maneuver to cut Hess out of its rights to the offshore oilfield.