ConocoPhillips has announced its acquisition of Marathon Oil Corporation in an all-stock transaction with an enterprise value of $22.5 billion. This includes $5.4 billion of net debt. The acquisition is expected to be immediately accretive to earnings, cash flows, and return of capital per share. 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.
ConocoPhillips expects to achieve at least $500 million of run rate cost and capital savings within the first full year following the closing of the transaction. Additionally, the company plans to increase its ordinary base dividend by 34% to 78 cents per share starting in the fourth quarter of 2024.
Upon closing of the transaction, ConocoPhillips expects share buybacks to be over $20 billion in the first three years, with over $7 billion in the first full year, at recent commodity prices. The company's chairman and CEO, Ryan Lance, stated that the acquisition of Marathon Oil further deepens their portfolio, adding high-quality, low-cost supply inventory adjacent to their leading U.S. unconventional position.
The transaction is expected to be immediately accretive to ConocoPhillips on earnings, cash from operations, free cash flow, and return of capital per share to shareholders. The company anticipates achieving the full $500 million of cost and capital synergy run rate within the first full year following the closing of the transaction.
ConocoPhillips also plans to repurchase over $7 billion in shares in the first full year, up from over $5 billion standalone, and over $20 billion in shares in the first three years. The transaction is subject to the approval of Marathon Oil stockholders, regulatory clearance, and other customary closing conditions, with the expected closing in the fourth quarter of 2024. ConocoPhillips had operations and activities in 13 countries, $95 billion of total assets, and approximately 10,000 employees at March 31, 2024. Production averaged 1,902 mboed for the three months ended March 31, 2024, and proved reserves were 6.8 bboe as of December 31, 2023. As a result of these announcements, the company's shares have moved -2.6% on the market, and are now trading at a price of $115.89. For the full picture, make sure to review ConocoPhillips's 8-K report.
