ConocoPhillips is set to acquire Marathon Oil in an all-stock deal valued at about $17.1 billion.
The deal comes as energy prices increase and oil companies continue to see high profits.
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Driving the news: The deal, which includes $5.4 billion in debt, is valued at $22.5 billion in total.
- Crude oil prices have climbed more than 12% this year, and the cost of a barrel has surpassed $80 this week. As a result, there has been an uptick in mergers between energy companies flush with cash.
- The proposed acquisition may face pushback from the U.S. government, which has increased antitrust reviews for energy companies and other sectors under the Biden administration.
- The acquisition will involve Marathon Oil shareholders receiving 0.2550 shares of ConocoPhillips common stock for each share of Marathon Oil common stock they own. The transaction will add highly desired acreage to ConocoPhillips’ existing U.S. onshore portfolio.
What we’re watching: The acquisition is expected to close in Q4 2024, pending approval from Marathon Oil shareholders.
- ConocoPhillips anticipates raising its ordinary dividend by 34% to 78 cents per share in Q4 2024 separately from the transaction. Once the marathon oil deal is completed and assuming recent commodity prices, ConocoPhillips plans to buy back more than $7 billion in shares in the first full year, and more than $20 billion in shares over the first three years.
Zoom out: The energy market has seen other significant deals in recent times, including Chevron’s purchase of Hess for $53 billion, Exxon Mobil’s purchase of Denbury Resources for $4.9 billion, and Exxon’s proposed acquisition of Pioneer Natural Resources for $60 billion.
What they’re saying: “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 ConocoPhillips Chairman and CEO Ryan Lance in a statement.
