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ConocoPhillips acquires Marathon Oil for $22.5 billion as part of consolidation of major energy sectors

Posted on by darion

ConocoPhillips, the largest independent oil and gas producer in the United States, announced Wednesday an agreement to acquire Marathon Oil for $22.5 billion. The deal is the latest in a series of significant mergers and acquisitions that are transforming the industry.

The all-stock transaction values ​​Marathon Oil at $30.33 per share, representing a 15% premium to the company’s closing price on Tuesday. as calculated by Finance Yahoo. The acquisition, which includes the assumption of $5.4 billion of Marathon’s debt, is expected to close in the fourth quarter of 2024.

This merger is part of a broader trend of consolidation in the US oil and gas sector, resulting from the need to increase reserves and achieve greater economies of scale. The industry has seen a surge in merger activity over the past two years, with approximately $250 billion in deals completed last year alone. This wave of consolidation will continue in 2024, supported by a strong stock market and record U.S. shale oil production

ConocoPhillips CEO Ryan Lance emphasized the strategic importance of the deal, stating: “We’re entering a sort of shale 2.0 period where it’s more about leveraging technology and performance, data analytics and some of the refractive capacity that allows us to expand some of the tier 1 resources. “

The merger is expected to generate significant cost synergies, with ConocoPhillips forecasting annual savings of $500 million in the first year after closing. Moreover, the acquisition will strengthen ConocoPhillips’ portfolio by adding more than 2 billion barrels of reserves.

Market reactions to this news were mixed. Marathon Oil shares rose 9% to $28.85, reflecting investor optimism about the premium offering. On the other hand, ConocoPhillips shares fell 3.8% to $115.10, indicating some caution in the market.

Analysts generally assessed the transaction positively, noting the operational benefits. “The transaction makes operational sense given the asset overlap, particularly with Eagle Ford and Bakken in L48,” said Jeoffrey Lambujon, an analyst at Tudor, Pickering and Holt. He also emphasized that Marathon Oil’s international gas assets will complement ConocoPhillips’ existing global gas operations.

Source: Yahoo Finance