ConocoPhillips and Marathon Oil Corporation have entered into a definitive agreement in which ConocoPhillips will acquire Marathon Oil in an all-stock transaction with an enterprise value of USD 22.5 billion, inclusive of USD 5.4 billion of net debt. The total value of the deal, excluding the debt, is around USD 17 billion. Furthermore, the transaction is expected to close in the fourth quarter of 2024.

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.

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“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 U.S. unconventional position,” said Ryan Lance, ConocoPhillips chairman and chief executive officer.  The transaction is subject to the approval of Marathon Oil stockholders, regulatory clearance, and other customary closing conditions.  

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Background of the Deal

The acquisition agreement stipulates that Marathon Oil shareholders will receive 0.2550 shares of ConocoPhillips common stock for each share of Marathon Oil common stock. This exchange ratio represents a 14.7% premium to Marathon Oil's closing share price on May 28, 2024, and a 16.0% premium to the prior 10-day volume-weighted average price. The deal is expected to be immediately accretive to earnings, cash flows, and return of capital per share.

Transaction Benefits

Immediately accretive: This acquisition is immediately accretive to ConocoPhillips on earnings, cash from operations, free cash flow, and return of capital per share to shareholders.

Delivers significant cost and capital synergies: Given the adjacent nature of the acquired assets and a common operating philosophy, ConocoPhillips expects to achieve the full USD 500 million cost and capital synergy run rate within the first full year following the transaction's closing. The identified savings will come from reduced general and administrative costs, lower operating costs, and improved capital efficiencies.

Future Outlook

Upon closing the transaction, ConocoPhillips expects share buybacks to be over USD 20 billion in the first three years, with over USD 7 billion in the first full year, at recent commodity prices. This aggressive buyback plan, coupled with the increased dividend, signals ConocoPhillip's commitment to delivering value to its shareholders.

About ConocoPhillips

ConocoPhillips is one of the world's largest independent upstream oil exploration and production (E&P) companies, with operations spanning 13 countries and a workforce of approximately 10,000 people. Headquartered in Houston, Texas, the company is renowned for its technical capabilities, asset quality, scale, and financial strength, uniquely positioning it to compete globally.

The company's mission is to safely find and deliver energy to the world, requiring ingenuity, technology, and investment. ConocoPhillips is committed to the efficient and effective exploration and production of oil and natural gas, which are foundational to enabling global economic development and human progress.

About MarathonOil

Marathon Oil Corporation, established in 1887, is an independent upstream exploration and production (E&P) company primarily focused on oil and gas projects in the USA. Headquartered in Houston, Texas, Marathon Oil has a rich history that began as the Ohio Oil Company and evolved into a significant player in the energy sector.

Marathon Oil is also known for its world-class integrated natural gas projects in Equatorial Guinea, complementing its U.S. operations. The company's strategy is centered on generating sustainable free cash flow at conservative oil prices and sharing that cash flow with investors, while maintaining a strong balance sheet and ESG excellence.

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