ConocoPhillips, a US oil and gas firm, has announced an all-stock acquisition of Marathon Oil for an enterprise value of $22.5 billion, which includes $5.4 billion in net debt. Shareholders of Marathon Oil will get 0.2550 ConocoPhillips shares for each share they own, as per the terms of the definitive agreement. The offer represents a 16% premium over the volume-weighted average price over ten days and a 14.7% premium over Marathon’s closing price on May 28, 2024.

The company anticipates positive effects on earnings, cash flow, and returns to shareholders from the transaction. Within the first year following the deal’s closing, the company expects $500 million in cost and capital synergies, mostly from increased operational efficiency and lower costs. By adding more than two billion barrels of resources, the acquisition of Marathon Oil’s assets will strengthen ConocoPhillips’ onshore US portfolio. The assets should complement the current operations and have a forward cost of supply under $30 per barrel WTI.

ConocoPhillips chairman and CEO Ryan Lance said: “This acquisition of Marathon Oil further deepens our portfolio and fits within our financial framework, adding high-quality, low-cost supply inventory adjacent to our leading US unconventional position.

Crucially, our cultures and beliefs are similar in that we prioritize operating properly and safely in order to generate long-term value for our shareholders. We see tremendous synergy potential, and the merger is immediately accretive to profits, cash flows and distributions per share.

The United States’ oil and gas industry has experienced notable consolidation, as evidenced by the $60 billion acquisition of Pioneer Natural Resources by ExxonMobil and the proposed $53 billion merger between Chevron and Hess by Chevron.

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