ConocoPhillips to Acquire Marathon Oil in $22.5 Billion Deal Amid Ongoing Energy Mergers

(P&GJ) — ConocoPhillips and Marathon Oil Corp. have announced a definitive agreement for ConocoPhillips to acquire Marathon Oil in an all-stock transaction valued at $22.5 billion, including $5.4 billion of net debt.

According to Reuters, the U.S. oil and gas industry has been riding a consolidation wave over the last two years. Last year was one of the most active, where M&A deals worth $250 billion were struck. The momentum has carried over into this year as the stock market continues to boom and as U.S. oil production scales new records.

Marathon Oil shareholders will receive 0.2550 shares of ConocoPhillips common stock for each share of Marathon Oil common stock, representing a 14.7% premium to Marathon Oil's closing share price on May 28, 2024, and a 16.0% premium to the prior 10-day volume-weighted average price.

Marathon Oil has operations in the Bakken basin in North Dakota, the Permian basin in West Texas and South Texas' Eagle Ford basin - regions that are prime targets for producers looking to increase their inventory, according to Reuters.

According to Ryan Lance, ConocoPhillips chairman and CEO, this acquisition strengthens their portfolio by adding high-quality, low-cost inventory adjacent to their leading U.S. unconventional position. The transaction is immediately accretive to earnings, cash flows, and distributions per share, with significant synergy potential.

Lee Tillman, Marathon Oil chairman, president, and CEO, expressed confidence in the combined assets and people of the two companies to deliver significant shareholder value over the long term.

Transaction benefits include immediate accretion to ConocoPhillips, significant cost and capital synergies, and enhancement of the premier Lower 48 portfolio. The transaction is expected to close in the fourth quarter of 2024, subject to approval by Marathon Oil stockholders, regulatory clearance, and other customary closing conditions.

Independent of the transaction, ConocoPhillips plans to increase its ordinary base dividend by 34% starting in the fourth quarter of 2024 and to repurchase over $7 billion in shares in the first full year, with plans to repurchase over $20 billion in shares in the first three years.

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