ConocoPhillips to Acquire Marathon Oil in $22.5 Billion All-Stock Deal

ConocoPhillips agreed Wednesday to acquire its smaller rival, Marathon Oil, the latest deal in a wave of consolidation sweeping the oil industry.

The all-stock deal values ​​Marathon at $22.5 billion, including debt. The acquisition “further deepens our portfolio and fits our financial framework, adding high-quality, low-cost inventory,” Ryan Lance, Conoco’s chief executive, said in a statement.

Marathon’s operations are located in some of the most desirable oil fields in New Mexico, North Dakota and Texas; it also drills off the coast of Equatorial Guinea.

Marathon traces its roots to the 19th century, and like ConocoPhillips, its predecessors were once part of John D. Rockefeller’s Standard Oil empire. In 2011, Marathon Oil spun off its refining business, which now operates under the name Marathon Petroleum.

The oil industry in the United States, the world’s largest crude producer, is made up of many small and medium-sized oil companies, ranging from family-owned businesses with a few wells in one state to global giants like Exxon Mobil. Wall Street values ​​ConocoPhillips at about $140 billion, making it about 10 times larger than Marathon Oil but about a quarter the size of Exxon.

Oil companies have made some of the biggest acquisitions of the past year despite regulatory scrutiny from the Biden administration and oil market volatility. U.S. giants have raked in record profits, giving them the firepower to acquire smaller players operating in oil-rich regions like the Permian Basin in New Mexico and Texas and the Gulf of Mexico.

According to Reuters, last year, trading activity in the oil and gas sector totaled $250 billion, including Exxon Mobil’s $60 billion acquisition of Pioneer Natural Resources and Hess by Chevron for $53 billion, which was approved by Hess shareholders on Tuesday.

The boom in oil trading is largely due to the strong recovery in commodity prices since the early days of the pandemic, when oil prices fell.

The benchmark price of US crude oil is now trading around $80 per barrel. Although prices are about a third lower than the highs reached in 2022 after Russia’s invasion of Ukraine, they are high enough to allow Western oil companies to make healthy profits and buy other producers. Conoco said the Marathon purchase would add more than two billion barrels to its portfolio, with an average supply cost of less than $30 per barrel.

Conoco was in the running to buy Endeavor Energy Resources earlier this year, but lost to Diamondback Energy, which in February announced a deal to buy the company for $26 billion.

Conoco’s deal with Marathon is subject to regulatory approval and a shareholder vote. The companies said they expect to finalize the deal in the fourth quarter.

In the year since the deal closed, Conoco has said it plans to cut costs at the combined company by at least $500 million. Conoco also said it plans to increase its dividend by 34 percent at the end of this year and repurchase more than $20 billion of its shares in the three years following the Marathon buyout.

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Sara Adm

Aimant les mots, Sara Smith a commencé à écrire dès son plus jeune âge. En tant qu'éditeur en chef de son journal scolaire, il met en valeur ses compétences en racontant des récits impactants. Smith a ensuite étudié le journalisme à l'université Columbia, où il est diplômé en tête de sa classe. Après avoir étudié au New York Times, Sara décroche un poste de journaliste de nouvelles. Depuis dix ans, il a couvert des événements majeurs tels que les élections présidentielles et les catastrophes naturelles. Il a été acclamé pour sa capacité à créer des récits captivants qui capturent l'expérience humaine.
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