US oil and gas company ConocoPhillips has announced an all-stock deal to acquire Marathon Oil for an enterprise value of $22.5bn, including $5.4bn of net debt.
Under the terms of the definitive agreement, Marathon Oil shareholders will receive 0.2550 ConocoPhillips shares for each share they hold.
The offer is a 14.7% premium over Marathon's closing price on 28 May 2024, and a 16% premium on the ten-day volume-weighted average price.
ConocoPhillips expects the acquisition to be accretive to earnings, cash flow, and shareholder returns.
The company anticipates $500m in cost and capital synergies within the first year post-closure of the deal, driven by operational efficiencies and reduced expenses.
The addition of Marathon Oil's assets will enhance ConocoPhillips' US onshore portfolio by adding more than two billion barrels of resources.
These assets are expected to have a forward cost of supply under $30 per barrel WTI, complementing the existing operations.
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 of supply inventory adjacent to our leading US unconventional position.
“Importantly, we share similar values and cultures with a focus on operating safely and responsibly to create long-term value for our shareholders. The transaction is immediately accretive to earnings, cash flows and distributions per share, and we see significant synergy potential.”
The deal is expected to close in the fourth quarter of 2024, subject to shareholder and regulatory approvals.
The oil and gas sector in the US has seen significant consolidation, with major deals including ExxonMobil's $60bn acquisition of Pioneer Natural Resources and Chevron's proposed $53bn merger with Hess.
Other noteworthy transactions in the industry include the $12bn purchase of CrownRock by Occidental Petroleum and the $26bn merger of Diamondback Energy with Endeavour Energy.
