The energy sector is witnessing a significant consolidation as ConocoPhillips moves to acquire Marathon Oil in an all-stock deal valued at $22.5 billion, including $5.4 billion in debt. The transaction is expected to close in the fourth quarter of 2024, subject to approval from Marathon Oil stockholders and regulatory authorities. Marathon Oil shareholders will receive 0.2550 shares of ConocoPhillips for each share they own, a 14.7% premium over Marathon’s last closing share price and will add highly desired acreage to ConocoPhillips’ existing U.S. onshore portfolio with over 2 billion barrels of resources. The deal is seen as ‘immediately accretive’ to ConocoPhillips’ earnings, cash from operations, free cash flow, and capital returns to shareholders. ConocoPhillips also plans to increase its dividend by 34%, to 78 cents per share, starting from the fourth quarter of 2024 and to repurchase over $7 billion in shares in the first year after the integration and over $20 billion in the first three years, assuming oil prices remain around current levels. This acquisition comes as crude prices have increased by over 12% this year, and big oil companies are reaping massive profits.
Key points
- ConocoPhillips will acquire Marathon Oil in a $22.5 billion all-stock deal.
- Marathon Oil shareholders to receive 0.2550 ConocoPhillips shares for each of their shares.
- The deal is expected to close in the fourth quarter of 2024.
- ConocoPhillips plans significant share buybacks and dividend increase following the acquisition.
