Dive Brief:
- ConocoPhillips plans to acquire Marathon Oil Corporation in an all-stock transaction worth $22.5 billion, according to a company announcement on Wednesday.
- The acquisition will give ConocoPhillips additional locations in complementary areas of the Eagle Ford, Bakken and Permian Basin oil fields, adding roughly 2 billion barrels to the company’s production with an estimated cost per barrel under $30.
- This announcement comes a day after shareholders for oil and natural gas producer Hess approved that company’s $53 billion merger with fellow energy giant Chevron.
Dive Insight:
The oil industry has been busy with M&A, with companies like ConocoPhillips and Chevron doubling down on fossil fuels. If approved, ConocoPhillips’ acquisition of Marathon Oil would be the fourth largest energy deal of the past year, according to information provided by GlobalData.
ConocoPhillips expects to see $500 million in annual savings thanks to synergies in this acquisition. That includes about $250 million in general and administrative costs, $150 million in operating costs and commercial optimization and $100 million in capital optimization.
Marathon shareholders will receive 0.255 shares of ConocoPhillips for every share of Marathon, representing a 16% premium to its 10-day average price, according to the announcement. The acquisition is subject to approval by Marathon’s stockholders. It is expected to close in the fourth quarter.
“Marathon Oil’s assets are a perfect complement to ConocoPhillips’ deep, durable and diversified global portfolio,” said Ryan Lance, ConocoPhillips CEO in a presentation on Wednesday. “The acquisition fits our financial framework, makes our plan even better and we see opportunities to improve the combined asset base moving forward.”
Elsewhere in energy M&A, Hess and Chevron announced their planned merger in October 2023. Now that shareholders have given the OK, that deal is expected to close soon. Also in October, Exxon Mobil announced plans to acquire Pioneer Natural Resources Company. That acquisition closed earlier this month.
BP has also made a few energy acquisitions recently, though it cast a broader net. It bought the rest of solar energy and battery company Lightsource bp in November before acquiring energy services company Getec Energie GmbH in January.
