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ConocoPhillips acquires Marathon Oil in $22.5 billion all-stock deal

ConocoPhillips has agreed to acquire Marathon Oil in an all-stock deal valued at $22.5 billion, including debt, as consolidation continues to reshape the US oil sector. This acquisition will provide Conoco, one of the world’s largest independent oil and gas producers, with a broad range of assets from North Dakota to Texas, strengthening its position in the prolific American shale fields.

The Financial Times first reported the negotiations between the two companies. Conoco’s CEO, Ryan Lance, stated that the deal “further deepens our portfolio” by adding “high-quality, low-cost supply inventory adjacent to our leading US unconventional position.” Expected to close in the fourth quarter, this transaction is the latest in a series of significant deals over the past eight months, as major oil companies consolidate to secure the best remaining shale resources.

Last October, ExxonMobil and Chevron announced acquisitions worth $60 billion and $53 billion, respectively, triggering a wave of sector-wide transactions with companies like Occidental Petroleum and Diamondback Energy following suit. Conoco, with a market capitalization of over $130 billion, had been seeking a deal in recent months, competing with Devon Energy to acquire Marathon, according to sources.

Under the agreement, Marathon shareholders will receive 0.255 Conoco shares for each Marathon share, representing a 14.7% premium to Marathon’s closing price on May 28. This values Marathon at $22.5 billion, including $5.4 billion of net debt. Following the announcement, Marathon shares rose 8.4% in New York, while Conoco shares fell 3.1%.

This acquisition is a significant boost for Conoco, which previously lost out to Diamondback Energy in a bid for Endeavor Energy Resources. Diamondback secured a $26 billion deal for Endeavor in February, leaving Conoco disappointed. Lance has emphasized the need for industry consolidation, stating in a March CNBC interview that “scale matters, diversity matters in the business.”

The Marathon acquisition is Conoco’s largest since acquiring Concho Resources for $10 billion in 2021 during the Covid-induced downturn. Marathon owns assets in North Dakota’s Bakken oilfield, Oklahoma’s Scoop Stack, Texas’s Eagle Ford, and New Mexico’s Permian Basin, as well as an integrated gas business in Equatorial Guinea.

Marathon’s CEO, Lee Tillman, described the deal as a “proud moment” for the company, expressing confidence that the combined assets and team with ConocoPhillips will deliver significant long-term shareholder value. Founded in 1887 as the Ohio Oil Company and later part of Standard Oil, Marathon spun off its refining arm, Marathon Petroleum, in 2011.

Morgan Stanley and Kirkland & Ellis are advising Marathon on the transaction, while Conoco is being advised by Evercore and Wachtell, Lipton, Rosen & Katz.