ConocoPhillips to Acquire Marathon Oil in $22.5 Billion Deal

ConocoPhillips has made a bold move in the energy sector by agreeing to acquire US rival Marathon Oil in a deal valued at $22.5 billion, including debt. The all-stock transaction, announced on Wednesday, will see Marathon shareholders receiving 0.255 shares of Conoco for each Marathon share they own, representing a 14.7% premium to the target’s closing share price on May 28.

This acquisition marks the latest in a series of mega deals that have reshaped the US energy sector over the past eight months, as major oil companies aim to secure the country’s best remaining shale resources and consolidate a once-fragmented industry. ExxonMobil and Chevron set the stage with massive acquisitions last October, sparking a wave of transactions across the sector.

Conoco, the largest independent producer globally with a market capitalization of around $139 billion, had been competing with smaller rival Devon Energy to acquire Marathon for several weeks before sealing the deal. The acquisition of Marathon, expected to close in the fourth quarter of 2024, would be Conoco’s biggest since acquiring Concho Resources for $10 billion in 2021.

Conoco CEO Ryan Lance expressed confidence in the deal, stating that it would deepen the company’s portfolio and add high-quality, low-cost supply inventory. The company also announced plans to increase its dividend and repurchase $20 billion of its shares in the first three years after the deal closes.

Marathon, with assets in various regions including the Bakken oilfield and the Permian Basin, has a rich history dating back to 1887. The company, originally known as the Ohio Oil Company, was eventually acquired by JD Rockefeller’s Standard Oil before spinning off its refining arm, Marathon Petroleum, in 2011.

The acquisition of Marathon by Conoco signifies a significant consolidation in the energy sector, reflecting the industry’s ongoing trend towards scale and efficiency.