ConocoPhillips has announced its intent to acquire Marathon Oil in an all-stock transaction valued at $22.5 billion, including $5.4 billion in net debt, marking the latest significant merger in the U.S. shale industry.
As per the agreement, Marathon Oil shareholders will receive 0.2550 shares of ConocoPhillips common stock for each Marathon Oil share they hold, reflecting a 14.7% premium over Marathon’s closing price on May 28, 2024, and a 16.0% premium over the prior 10-day volume-weighted average price.
“This acquisition of Marathon Oil enhances our portfolio and aligns with our financial strategy, adding high-quality, cost-effective inventory that complements our leading U.S. unconventional assets,” stated Ryan Lance, chairman and CEO of ConocoPhillips.
The deal, which requires approval from Marathon Oil shareholders and regulatory authorities, is expected to finalize in the fourth quarter of 2024.
Following the completion of the transaction and based on current commodity prices, ConocoPhillips plans to repurchase over $7 billion in shares in the first year, increasing from over $5 billion on a standalone basis, and aims to repurchase over $20 billion in shares within the first three years.
Apart from this merger, ConocoPhillips plans to raise its ordinary base dividend by 34% to 78 cents per share starting in the fourth quarter of 2024.
This merger follows a wave of transactions in the U.S. shale industry, which saw $234 billion in mergers and acquisitions last year—the highest since 2012, according to the Energy Information Administration (EIA). The momentum has continued into 2024, with a record $51 billion in deals announced in the first quarter, driven largely by activity in the Permian Basin, as reported by Enverus Intelligence Research (EIR).
