ConocoPhillips to buy Marathon Oil in US$22.5b deal
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The news: Oil giant ConocoPhillips has agreed to buy Marathon Oil in an all stock deal worth USD22.5 billion ($33.91 billion), adding another merger to a wave of consolidation across the US energy sector.
The numbers: The all-stock acquisition of Marathon Oil including USD5.4 billion of debt, will give Marathon an enterprise value of USD22.5 billion.
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 the closing share price of Marathon Oil on May 28, 2024, and a 16.0% premium to the prior 10-day volume-weighted average price.
The context: The transaction is the latest in a suite of deals that have characterised the US energy sector, following ExxonMobil’s USD60 billion purchase of Pioneer and Chevron’s agreed takeover of Hess for USD53 billion. Occidental also stepped in to acquire CrownRock while Diamondback Energy moved on Endeavor Energy Partners earlier in the year.
Ryan Lance, ConocoPhillips chairman and CEO said in a statement: “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.”
Lance added that the transaction is immediately accretive to earnings, cash flows and distributions per share, and holds significant synergy potential.
According to sources cited by the Financial Times, Conoco has been competing with rival Devon Energy to acquire Marathon over the past several weeks. Having lost out to Diamondback in its pursuit of Endeavour Energy Resources earlier this year, the Marathon acquisition will be Conoco’s biggest purchase since picking up Concho Resources for USD10 billion 2021.
Independent of the transaction, Conoco also announced that it would increase its ordinary base dividend by 34% to 78 cents per share starting in the fourth quarter of 2024.
Conoco’s acquisition of Marathon Oil remains subject to regulatory and shareholder approval.
The source: ConocoPhillips press release
