ConocoPhillips said it entered into a definitive agreement to acquire Marathon Oil Corporation in an all-stock transaction with an enterprise value of US$22.5 billion, inclusive of US$5.4 billion of net debt.
Under the terms of the agreement, 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% premium to the prior 10-day volume-weighted average price.
“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 Ryan Lance, ConocoPhillips chairman and chief executive officer.
He added that the transaction is immediately accretive to earnings, cash flows and distributions per share.
Discussing the deal, Lee Tillman, Marathon Oil chairman, president and chief executive officer, said “Powered by our dedicated employees and contractors, we built a top-performing portfolio with a multi-year track record of peer-leading operational execution, strong financial results and compelling return of capital to our shareholders – all while holding true to our core values of safety and environmental excellence. ConocoPhillips is the right home to build on that legacy, offering a truly unique combination of added scale, resilience and long-term durability.”
ConocoPhillips said, given the adjacent nature of the acquired assets and a common operating philosophy, that it expects to achieve the full US$500 million of cost and capital synergy run rate within the first full year following the transaction’s closing. It said the identified savings will come from reduced general and administrative costs, lower operating costs and improved capital efficiencies.
Further, the acquisition is expected to add highly complementary acreage to ConocoPhillips’ existing U.S. onshore portfolio, adding over 2 billion barrels of resource with an estimated average point forward supply cost of less than US$30 per barrel WTI.
The transaction is subject to the approval of Marathon Oil stockholders, regulatory clearance and other customary closing conditions. The transaction is expected to close in the fourth quarter of 2024.
This acquisition comes in a year of similar deals estimated by Rystad Energy to exceed US$214 billion this year. Notable acquisitions include ExxonMobil’s acquisition of Pioneer Natural Resources and Chevron’s planned acquisition of Hess.
