ConocoPhillips Pumps the Gas and Crosses Finish Line On Acquisition of Marathon Oil

ConocoPhillips (COPS) agreed on Wednesday to acquire Marathon Oil (MRO) in an all-stock transaction valued at $17Bn, enhancing the company’s shale assets amid a significant consolidation wave in the oil and gas industry.

The acquisition will add 2Bn barrels of resources to ConocoPhillips’ U.S. inventory, expanding its presence across shale fields in Texas, New Mexico, and North Dakota.

“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,” stated ConocoPhillips CEO Ryan Lance.

Analysts at Truist Securities note that the deal will make ConocoPhillips one of the largest asset holders in the Bakken shale play in North Dakota and the Eagle Ford play in Texas.

According to Andrew Dittmar, M&A analyst at Enverus, the acquisition will boost ConocoPhillips’ market cap to over $150Bn, solidifying its position as the largest independent producer and putting it on par with some major companies. ConocoPhillips will become larger than BP but will remain smaller than Shell.

ConocoPhillips’ production in Eagle Ford will increase to nearly 400,000 barrels per day, adding about 1,000 new locations, said Andy O’Brien, senior vice president of strategy, commercial, sustainability, and technology, during a conference call Wednesday. In the Bakken, production will double to over 200,000 barrels per day, and the company will gain more than 400 locations in the Permian Basin.

Additionally, ConocoPhillips will add 2M metric tons per year of net liquid natural gas capacity in Equatorial Guinea on the west coast of Africa.

The acquisition is expected to undergo close scrutiny from the Federal Trade Commission, noted Dittmar, but Marathon’s assets are spread across multiple basins, which favors regulatory approval. The largest area of concentration and potential FTC concern would be in the Eagle Ford, where ConocoPhillips will surpass EOG Resources to become the largest operator.