Big Oil keeps doing big deals.
ConocoPhillips said Wednesday it had agreed to buy Marathon Oil in an all-stock deal worth $22.5 billion, including about $5.4 billion of debt.
Marathon Oil shareholders will receive 0.255 ConocoPhillips shares for each Marathon share they own, representing a 14.7% premium to the closing price on Tuesday.
Shares of Marathon (MRO) were up more than 10% in premarket trade, while Conoco (COP) stock was down about 2%.
The merger of the Houston-based rivals follows ExxonMobil’s (XOM) $60 billion purchase of Pioneer and Chevron’s (CVX) agreed takeover of Hess for $53 billion. The wave of consolidation has also included Occidental buying CrownRock and Diamondback Energy acquiring Endeavor Energy Partners in multibillion-dollar cash-and-stock deals.
Oil giants are flush with cash and printing bumper profits following years of elevated prices. They’re using those windfalls to snap up assets in the Permian basin — the oil field that has helped make the US the world’s top producer of oil and gas — and boost returns for shareholders even as pressure builds for them to invest more in renewable energy.
“This acquisition of Marathon Oil further deepens our portfolio and fits within our financial framework, adding high-quality, low cost of supply inventory,” Ryan Lance, ConocoPhillips CEO, said in a statement.
The Financial Times reported earlier Wednesday that a deal was close and that Conoco and Devon Energy had been vying for weeks to acquire Marathon.
Until 1962, Marathon Oil was called The Ohio Oil Company, which was founded in 1887 and was bought two years later by John D. Rockefeller’s Standard Oil.
CEO Lee Tillman described Wednesday’s deal as “a proud moment” and ConocoPhillips as “the right home” to build on a legacy of operational excellence and strong earnings.
“When combined with the global ConocoPhillips portfolio, I’m confident our assets and people will deliver significant shareholder value over the long term,” Tillman said in a statement.
ConocoPhillips said it was targeting savings worth $500 million within the first full year of the transaction closing, which is expected in the fourth quarter of 2024 pending the approval of Marathon shareholders and regulators.
The company plans to repurchase over $7 billion in shares in the first full year, and over $20 billion in the first three years, it added.
This story has been updated with additional information.
