ConocoPhillips Acquires Marathon Oil in $22.5B Deal

ConocoPhillips has announced its acquisition of Marathon Oil Corporation in an all-stock transaction worth $22.5 billion, including $5.4 billion of net debt. The acquisition is expected to be immediately accretive to earnings, cash flows, and return of capital per share for ConocoPhillips. Additionally, the company anticipates achieving at least $500 million of run rate cost and capital savings within the first full year following the closing of the transaction.

ConocoPhillips also plans to increase its ordinary base dividend by 34% to 78 cents per share starting in the fourth quarter of 2024. Furthermore, the company expects share buybacks to exceed $20 billion in the first three years, with over $7 billion in the first full year, at recent commodity prices.

The acquisition is expected to add highly complementary acreage to ConocoPhillips’ existing U.S. onshore portfolio, with over 2 billion barrels of resource and an estimated average point forward cost of supply of less than $30 per barrel WTI.

In terms of returns to shareholders, ConocoPhillips plans to repurchase over $7 billion in shares in the first full year, an increase from over $5 billion standalone, and over $20 billion in shares in the first three years.

The transaction is subject to approval from Marathon Oil stockholders, regulatory clearance, and other customary closing conditions, and is expected to close in the fourth quarter of 2024.

ConocoPhillips’ financial advisor for the transaction is Evercore, while Wachtell, Lipton, Rosen & Katz is serving as the company’s legal advisor. On the other hand, Morgan Stanley & Co. LLC is serving as Marathon Oil’s financial advisor, and Kirkland & Ellis LLP is serving as Marathon Oil’s legal advisor for the transaction.

ConocoPhillips is a global exploration and production company with operations in 13 countries, $95 billion of total assets, and approximately 10,000 employees. At the end of March 2024, the company's production averaged 1,902 thousand barrels of oil equivalent per day, and its proved reserves were 6.8 billion barrels of oil equivalent as of December 31, 2023. Following these announcements, the company's shares moved 9.5%, and are now trading at a price of $28.98. If you want to know more, read the company's complete 8-K report here.

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