WionDrive News Desk 
In the latest mega-deal within the energy industry, ConocoPhillips, a leading independent oil and gas producer in the United States, announced on Wednesday that it has agreed to acquire Marathon Oil for $22.5 billion. The U.S. oil and gas sector has been experiencing a wave of consolidation over the past two years, as companies aim to strengthen their reserves and achieve economies of scale. The previous year witnessed a flurry of deals totaling around $250 billion, and this momentum has carried over into the current year, fueled by a booming stock market and record-breaking U.S. shale oil production levels.
ConocoPhillips CEO Ryan Lance stated, “We’re heading into a period of kind of Shale 2.0, which is more about using technology and efficiencies, data analytics, and some of the refrack potential that allows us to extend some tier one inventory.”
The all-stock offer translates to $30.33 per Marathon Oil share, representing a premium of nearly 15% over the stock’s closing price on Tuesday, according to Reuters calculations. The transaction, which includes $5.4 billion of Marathon Oil’s debt, is expected to be completed in the fourth quarter of 2024.
In morning trading, Marathon Oil’s shares rose by 9% to $28.85, while ConocoPhillips’ shares declined by 3.8% to $115.10.
Tudor, Pickering, and Holt analyst Jeoffrey Lambujon commented, “The deal makes sense operationally given the asset overlap most meaningfully in the Eagle Ford and Bakken in L48.” He added that Marathon Oil’s international gas assets align well with ConocoPhillips’ global gas footprint.
ConocoPhillips anticipates cost savings of $500 million within the first full year after the transaction’s closing. The acquisition will add over 2 billion barrels of reserves to the company’s portfolio.
Marathon Oil holds operations in the Bakken basin in North Dakota, the Permian basin in West Texas, and the Eagle Ford basin in South Texas – regions that are prime targets for producers looking to increase their inventory.
In the previous quarter, ConocoPhillips was the third-largest oil and gas producer by volume in the Permian basin, the top U.S. shale oil field.
This deal follows Exxon Mobil’s $60 billion acquisition of Pioneer Natural Resources, announced in October, and Chevron’s proposed $53 billion merger with Hess, which was approved by Hess’ shareholders on Tuesday.
However, the consolidation activity in the industry has attracted increased antitrust scrutiny. ConocoPhillips CEO Lance stated that the Federal Trade Commission (FTC) recognizes that oil is a global market, and the deal represents a “very, very small percentage of that global market.” He added that the company’s estimate of a closing late this year is conservative, as the FTC has “already kind of gotten over that Rubicon with some of the deals that have come over the last couple of years.”
ConocoPhillips also announced that it would divest nearly $2 billion worth of assets and signaled its intention to ramp up share buybacks to $7 billion next year from the projected $5 billion this year. The company committed to buying $20 billion of its shares over the three years following the deal’s closing.
