Texas-headquartered energy giant ConocoPhillips has brought a U.S.-based oil and gas company into its fold by wrapping up the multibillion-dollar business combination with Marathon Oil Corporation.
Earlier this year, ConocoPhillips set the wheels in motion to acquire Marathon Oil in an all-stock transaction with an enterprise value of $22.5 billion, including $5.4 billion of net debt. As a result, the firm 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.
While explaining the rationale for the business combination, Ryan Lance, ConocoPhillips’ Chairman and CEO, said it would add “high-quality, low cost of supply inventory adjacent to our leading U.S. unconventional position,” adding that the transaction would be “immediately accretive to earnings, cash flows and distributions per share, and we see significant synergy potential.”
Thanks to this merger, ConocoPhillips expects share buybacks to be over $20 billion in the first three years after completion, with over $7 billion in the first full year, at recent commodity prices. Lee Tillman, Marathon Oil’s Chairman, President, and CEO, believes ConocoPhillips is ‘the right home‘ to build on his firm’s legacy, offering “a truly unique combination of added scale, resilience and long-term durability.”
Tillman continued: “With its premier global asset base, strong balance sheet and laser focus on operational excellence, ConocoPhillips’ track record of long-term investments, differentiated shareholder distributions and active portfolio management are unmatched. When combined with the global ConocoPhillips portfolio, I’m confident our assets and people will deliver significant shareholder value over the long term.”
ConocoPhillips, which had operations and activities in 13 countries, $97 billion in total assets, and approximately 10,300 employees on September 30, 2024, confirmed the completion of the Marathon Oil acquisition on November 22. As a result, each share of Marathon Oil common stock was converted into the right to receive 0.255 shares of ConocoPhillips common stock at the effective time of the merger, with cash instead of fractional shares.
Lance highlighted: “This acquisition of Marathon Oil is a perfect fit for ConocoPhillips, adding to our deep, durable and diverse portfolio while meeting our strict financial framework. Marathon Oil adds high-quality, low cost of supply inventory adjacent to our leading U.S. unconventional position. We have a strong history of seamlessly integrating assets and we expect to deliver synergies of over $1 billion on a run rate basis in the next 12 months.”
The completion of the merger comes several months after ConocoPhillips revealed two long-term strategic agreements, enabling it to supply liquefied natural gas (LNG) to the European and Asian markets from 2027.
The U.S. energy firm also inked other deals, including a 15-year commercial agreement to secure regasification capacity in Europe; a 20-year deal with Mexico Pacific; and two long-term LNG agreements with QatarEnergy for up to 2 million tons of LNG per year.
