ConocoPhillips said on Wednesday it would buy Marathon Oil in an all-stock deal with an enterprise value of $22.5 billion, including $5.4 billion of net debt, in the latest merger transaction in the U.S. shale industry.
Under the terms of the definitive agreement, Marathon Oil shareholders will receive 0.2550 shares of ConocoPhillips common stock for each share of Marathon Oil common stock, representing a 14.7% premium to the closing share price of Marathon Oil on May 28, 2024, and a 16.0% premium to the prior 10-day volume-weighted average price.
"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 U.S. unconventional position," ConocoPhillips chairman and CEO Ryan Lance said in a statement.
"The transaction is immediately accretive to earnings, cash flows and distributions per share, and we see significant synergy potential."
The agreed deal is subject to the approval of Marathon Oil stockholders, regulatory clearance, and other customary closing conditions. It is expected to close in the fourth quarter of 2024, ConocoPhillips said.
Upon the closing of the transaction and assuming recent commodity prices, ConocoPhillips plans to buy back more than $7 billion in shares in the first full year, up from over $5 billion standalone, and repurchase over $20 billion in shares in the first three years.
Independent of the planned deal, ConocoPhillips expects to increase its ordinary base dividend by 34% to 78 cents per share starting in the fourth quarter of 2024.
The ConocoPhillips-Marathon Oil deal is the latest in a series of transactions in the U.S. shale industry which boomed last year and earlier this year.
U.S. upstream companies spent as much as $234 billion on mergers and acquisitions last year-the highest such spend since 2012, the Energy Information Administration (EIA) said earlier this year.
2024 also began on a high note-companies announced a record $51 billion in deals in the first quarter, driven - again - by deal-making in the Permian, according to Enverus Intelligence Research (EIR).
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
U.S. Gasoline Prices Post Super Rare Double-Digit Weekly Drop
Oil Prices Fall After API Reports Large Surprise Builds in Crude And Products
Oil Price Plunge Hits BP and Shell Shares
Washington Looking to Revive More Shuttered Nuclear Plants
Rongsheng Becomes Next Chinese Refiner to Buy Trans Mountain Oil