ConocoPhillips buys Marathan Oil
ConocoPhillips to acquire Marathon Oil Corporation in all-stock transaction
OIL AND GAS
Naval Singh
5/30/20242 min read
ConocoPhillips to Acquire Marathon Oil: A Major Move in the Oil Industry
ConocoPhillips is set to acquire Marathon Oil in an all-stock transaction valued at $22.5 billion, including $5.4 billion in debt. This significant deal aims to strengthen ConocoPhillips' position in the U.S. shale oil industry and enhance shareholder returns.
Key Points of the Acquisition:
1. Accretive to Earnings and Cash Flow:
- The acquisition is expected to immediately boost ConocoPhillips' earnings and cash flows, making it a financially sound move from the start.
2. Cost and Capital Savings:
- ConocoPhillips anticipates achieving at least $500 million in cost and capital savings within the first year after the deal closes. These savings will come from reduced administrative and operating costs.
3. Enhanced Portfolio:
- The deal adds over 2 billion barrels of resources to ConocoPhillips' portfolio, with an average cost of supply of less than $30 per barrel. This includes valuable assets in North Dakota, Texas, and New Mexico.
4. Shareholder Returns:
- Independent of the acquisition, ConocoPhillips plans to increase its base dividend by 34% to 78 cents per share starting in the fourth quarter of 2024.
- Post-acquisition, the company plans to repurchase over $7 billion in shares in the first year and over $20 billion in the first three years, assuming current commodity prices.
Transaction Details:
- Marathon Oil shareholders will receive 0.2550 shares of ConocoPhillips for each share of Marathon Oil, representing a 14.7% premium to Marathon Oil’s closing share price on May 28, 2024.
- The deal, expected to close in the fourth quarter of 2024, is subject to approval from Marathon Oil stockholders and regulatory clearance.
Statements from Leadership:
- Ryan Lance, ConocoPhillips CEO:
- Highlighted that the acquisition aligns with ConocoPhillips' financial framework and strengthens their portfolio with high-quality, low-cost assets.
- Lee Tillman, Marathon Oil CEO:
- Expressed pride in Marathon Oil’s achievements and confidence that the combined assets will create significant long-term value for shareholders.
This acquisition reflects the ongoing consolidation trend in the U.S. oil industry, where larger companies are acquiring assets to streamline operations and enhance efficiency. With this move, ConocoPhillips aims to solidify its position as a leading player in the sector, leveraging the combined strengths of both companies to drive future growth and profitability.
