ConocoPhillips' Bid for Marathon Oil is Latest Bold O&G Deal

Researched by Industrial Info Resources (Sugar Land, Texas)--ConocoPhillips (NYSE:COP) (Houston, Texas) announced it will acquire Marathon Oil Corporation (NYSE:MRO) (Houston) in an all-stock transaction valued at $22.5 billion, including debt. ConocoPhillips says the acquisition will add more than "2 billion barrels of resource, with an estimated average point forward cost of supply of less than $30 per barrel WTI," to its existing U.S. onshore portfolio. The transaction is expected to close in the fourth quarter, subject to regulatory clearance and shareholder approval. Industrial Info is tracking more than $3 billion worth of active and planned projects worldwide from ConocoPhillips, not including what it will pick up from Marathon Oil.

Click on the image at right for a graph detailing active and planned ConocoPhillips projects, by type.

The story isn't over: Bloomberg and other news outlets are reporting that Devon Energy (NYSE:DVN) (Oklahoma City, Oklahoma), which has been aiming to grow its footprint in U.S. shale plays, might be interested in a competing bid. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Plant Database can click here for a list of profiles for active Devon plants.

Marathon Oil's properties include production and pipeline assets in the Wyoming Basin, the Williston Basin of North Dakota and the Eagle Ford Shale of Texas, as well as offshore assets near Equatorial Guinea's Bioko Island. Analysts at Truist Securities (Atlanta, Georgia) told MSNBC the acquisition will make ConocoPhillips one of the largest asset holders in the Bakken and the Eagle Ford. Subscribers can click here for a list of profiles for active Marathon Oil plants.

"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, the chief executive officer of ConocoPhillips, in a press release.

Lance also said in a conference call he was confident the deal would survive an antitrust review: "I think we're encouraged from the commentary that's coming out of the [U.S. Federal Trade Commission] that they recognize that oil is a global market, and it trades on a global market, and this is a very, very small percent of that global market."

Still, the newly empowered ConocoPhillips will have its work cut out for it in the Eagle Ford Shale. Earlier this month, Crescent Energy (NYSE:CRGY) (Houston) said it would acquire SilverBow Resources (NYSE:SBOW) (Houston) for $2.1 billion, creating one of the largest operators in the Eagle Ford. For more information, see May 17, 2024, article - Crescent Takes Eagle Ford Acreage with SilverBow Acquisition.

ConocoPhillips' move to acquire Marathon Oil also follows Exxon Mobil Corporation's (NYSE:XOM) (Irving, Texas) $60 billion acquisition last year of Pioneer Natural Resources. Earlier this week, shareholders of Hess Corporation (NYSE:HES) (New York, New York) approved a $53 billion takeover offer from Chevron Corporation (NYSE:CVX) (San Ramon, California) of Hess. The sustained strength of commodity prices is driving the rise in mergers and acquisitions across the Oil & Gas Industry.

For more information, see May 29, 2024, article - Hess Shareholders Approve $53 Billion Sale to Chevron, but Hurdles Remain, and October 12, 2023, article - It's Official: ExxonMobil to Acquire Pioneer Natural Resources for $59.5 Billion.

ConocoPhillips also is expanding its activity in Canada's Montney Shale, where the company expects to add more than 100,000 barrels of oil-equivalent per day of production over the next decade. ConocoPhillips could begin construction before the end of the year on a third-phase refrigeration train addition at its Inga North Sour Gas Plant in Wonowon, British Columbia, which processes gas gathered from the Montney Shale. Train 3 would add 119 million standard cubic feet per day of inlet gas capacity to the complex, which presently has a capacity of 230 million standard cubic feet per day. The company also is considering a fourth-phase train of similar capacity. Subscribers can read detailed project reports on Phase III and Phase IV.

Subscribers can click here for a full list of reports for active and planned projects from ConocoPhillips.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).