Energy
Wednesday, May 29th, 2024 4:12 pm EDT
Key Points
- ConocoPhillips agrees to acquire Marathon Oil in a $17 billion all-stock transaction, enhancing its shale assets amidst industry consolidation.
- The acquisition adds 2 billion barrels of resources in the U.S., expanding ConocoPhillips’ reach across shale fields in Texas, New Mexico, and North Dakota.
- ConocoPhillips becomes one of the largest asset holders in the Bakken shale play and the Eagle Ford play, with plans to boost production in Eagle Ford to nearly 400,000 barrels per day and in the Bakken to over 200,000 barrels per day. Additionally, the company gains 2 million metric tons per year of net liquid natural gas capacity in Equatorial Guinea.
ConocoPhillips has entered into an all-stock transaction valued at $17 billion to acquire Marathon Oil, a move aimed at bolstering its shale assets amidst a significant wave of consolidation in the oil and gas industry. The deal will augment ConocoPhillips’ inventory by 2 billion barrels of resources in the U.S., expanding its presence across shale fields in Texas, New Mexico, and North Dakota. This acquisition aligns with ConocoPhillips’ strategic objectives, enhancing its portfolio with high-quality, low-cost inventory adjacent to its existing leading U.S. unconventional position, according to CEO Ryan Lance. With this deal, ConocoPhillips will become one of the largest asset holders in the Bakken shale play and the Eagle Ford play, significantly increasing its market cap to over $150 billion and solidifying its position as the largest independent producer. The acquisition will also substantially boost ConocoPhillips’ production capacity, particularly in the Eagle Ford and Bakken regions, with additional locations in the Permian Basin. Moreover, the company will gain 2 million metric tons per year of net liquid natural gas capacity in Equatorial Guinea. While the acquisition is expected to face scrutiny from regulatory bodies like the Federal Trade Commission, analysts anticipate favorable approval due to the dispersed nature of Marathon’s assets across multiple basins. This move by ConocoPhillips follows similar consolidation efforts by its peers, Exxon Mobil and Chevron, highlighting the ongoing transformation in the industry. Despite initial market reactions, ConocoPhillips anticipates significant earnings, cash flow, and shareholder returns post-acquisition, with plans for substantial share buybacks and cost savings estimated at $500 million in the first year.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/05/29/conocophillips-to-buy-marathon-oil-in-17point1-billion-all-stock-deal-that-bolsters-shale-assets.html
