In a move that shakes up the energy landscape, ConocoPhillips has announced a $22.5 billion all-stock acquisition of Marathon Oil. The deal, which is the latest in a series of major consolidations within the oil and gas industry, will further strengthen ConocoPhillips’ position and diversify its portfolio.
The acquisition will give ConocoPhillips access to Marathon Oil’s operations in prime basins, including the Bakken, Permian, and Eagle Ford regions. These assets are highly coveted by producers seeking to expand their inventory and capitalize on the booming U.S. oil production.
“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.
The consolidation trend in the oil and gas sector has been gaining momentum, with Exxon Mobil’s acquisition of Pioneer Natural Resources and Chevron’s proposed merger with Hess being recent examples. This latest deal is expected to face increased antitrust scrutiny as the industry continues to consolidate.
Under the terms of the agreement, Marathon shareholders will receive 0.2550 shares of ConocoPhillips stock for each share they hold, representing a premium of nearly 15% over Marathon’s closing price on Tuesday.
The transaction, which includes $5.4 billion of Marathon’s debt, is expected to close in the fourth quarter of 2024. ConocoPhillips anticipates achieving $500 million in cost and capital synergy run rate within the first year following the closure of the deal.