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In the United States, the process of consolidation in the oil and gas industry has not stopped. The latest move was made by ConocoPhillips, which agreed to acquire Marathon Oil for $22.5 billion, including debt: a deal that will raise the total value of the business announced this year in the sector to more than $90 billion, and according to Enverus, the billings for 2023 exceed $250 billion, breaking the Guinness World Record.
ConocoPhillips’ offer was purely on paper, requiring Marathon to pay 0.255 treasury shares for each share, valuing each share at $30.33, a 14.7% premium to ConocoPhillips’ closing price of $5.4 on Tuesday, the 28th. Marathon has $1 billion in debt. The latter’s shares rose about 8% on Wall Street, while ConocoPhillips’ shares fell more than 3%.
ConocoPhillips CEO Ryan Lance commented: “This acquisition further expands our portfolio and fits well into our financial structure, adding high-quality and low-cost reserves,” mainly in the shale oil sector where the company is already involved.
The merger is expected to generate at least $500 million in synergies within the first year, which is expected to be completed in the fourth quarter. Around the same time, ConocoPhillips also pledged to increase its dividend by 34% and increase its buybacks, with the goal of repurchasing $20 billion worth of stock within three years of the merger.
Marathon — in which Devon Energy is also apparently interested — brings 2 billion barrels of resources at a cost of about $30 per barrel to extract. The company is active in the Bakken in North Dakota, the New Mexico side of the Permian Basin, Oklahoma and Texas, and has natural gas assets in Equatorial Guinea.
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