ConocoPhillips and Marathon Oil Corporation announced Wednesday the companies have entered into a definitive agreement in which ConocoPhillips will acquire Marathon Oil in an all-stock transaction, with an enterprise value of $22.5 billion, to include $5.4 billion of net debt.
ConocoPhillips, one of the world’s largest energy companies, is Alaska’s largest oil producer and has been a leader in oil and gas exploration and development in the state for more than 50 years.
Marathon Oil Corporation is an independent energy company specializing in exploration and production, which had a refinery on the Kenai Peninsula until 2011, when it was spun off as Marathon Petroleum, and operates in 12 states.
“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,” said Ryan Lance, ConocoPhillips chairman and chief executive officer. “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.”
Under the terms of the 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.
Key points:
- Acquisition of Marathon Oil Corporation is expected to be immediately accretive to earnings, cash flows and return of capital per share.
- ConocoPhillips expects to achieve at least $500 million of run rate cost and capital savings within the first full year following the closing of the transaction.
- Independent of the transaction, ConocoPhillips expects to increase its ordinary base dividend by 34% to 78 cents per share starting in the fourth quarter of 2024.
- Upon closing of the transaction, ConocoPhillips expects share buybacks to be over $20 billion in the first three years, with over $7 billion in the first full year, at recent commodity prices.
