ConocoPhillips to Acquire Marathon Oil in Major $17 Billion Deal
ConocoPhillips is set to acquire Marathon Oil for $17 billion in an all-stock deal, marking a major consolidation in the U.S. oil and gas industry.
ConocoPhillips operates in 14 countries and is a major global energy company. Marathon Oil focuses on U.S. shale, enhancing innovation and efficiency.
This acquisition will expand ConocoPhillips‘ reach across U.S. shale fields from Texas to North Dakota.
It also extends its reserves to distant locations like Equatorial Guinea. The deal reflects a 14.7% premium over Marathon Oil’s last closing stock price.
The enterprise value of the deal is about $22.5 billion. Recently, ConocoPhillips has focused on growth through acquisitions.
In October, Exxon Mobil announced a $62 billion deal to acquire Pioneer Natural Resources.
This move consolidates its position in the Permian Basin. Chevron followed with a $53 billion acquisition of Hess.
ConocoPhillips had already expanded in the Permian Basin by acquiring Concho Resources for $13 billion.
They also purchased Shell’s assets for $9.5 billion. This acquisition differs from others.
While Exxon and Chevron focus on future drilling sites, ConocoPhillips targets cost reductions.
They focus on the Eagle Ford and Bakken shale basins, according to Citigroup analysts.
Following the announcement, ConocoPhillips shares fell by 2.3% in New York trading. Meanwhile, Marathon Oil shares rose by 11%.
Despite being smaller than Exxon and Chevron’s deals, ConocoPhillips’ acquisition might face antitrust scrutiny.
The U.S. Federal Trade Commission (FTC) has shown increased interest in mergers.
The FTC did not challenge Exxon’s deal but required excluding Pioneer co-founder Scott Sheffield from the new company’s board.
ConocoPhillips to Acquire Marathon Oil in Major $17 Billion Deal
Last year, Devon Energy discussed a possible merger with Marathon Oil, according to Bloomberg News.
ConocoPhillips expects the acquisition to add 2 billion barrels to its reserves.
The company anticipates closing the deal in the fourth quarter, pending regulatory approvals.
Post-acquisition, ConocoPhillips plans over $20 billion in stock buybacks over the next three years.
They plan more than $7 billion in the first year, assuming current commodity prices.
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