ConocoPhillips To Acquire Marathon Oil In All-Stock Deal At 14.7% Premium: Details

ConocoPhillips To Acquire Marathon Oil In All-Stock Deal At 14.7% Premium: Details

ConocoPhillips to acquire Marathon Oil in all-stock deal at 14.7% premium: details

Marathon Oil Company (NYSE:MRO) And ConocoPhillips (NYSE:COP) stocks are moving in opposite directions Wednesday after revealing a definitive agreement in which ConocoPhillips will acquire Marathon Oil in an all-stock transaction with a enterprise value of $22.5 billion.

Under the agreement, Marathon Oil shareholders will receive 0.2550 ConocoPhillips shares for each Marathon Oil share they own.

The acquisition price represents a premium of 14.7% to the closing price of Marathon Oil stock on May 28, 2024 and a premium of 16.0% to the 10-day volume-weighted average price previous ones.

The acquisition agreement is expected to close in the fourth quarter of 2024, subject to Marathon Oil shareholder approval and other customary closing conditions.

Synergies: This acquisition is expected to add more than 2 billion barrels of resources with an estimated average supply cost of less than $30 per barrel of WTI to ConocoPhillips’ existing U.S. onshore portfolio.

The repurchase is expected to be immediately accretive to ConocoPhillips’ earnings, operating cash flow, free cash flow and return of capital per share to shareholders.

Additionally, ConocoPhillips expects to achieve the full $500 million in cost and capital synergies within the first full year following the closing of the transaction.

Dividend and share buyback boost: ConocoPhillips revealed that it plans to increase its basic ordinary dividend per share by 34% to $0.78 starting in the fourth quarter of 2024.

After the transaction closes and assuming recent commodity prices, ConocoPhillips aims to repurchase more than $7 billion in shares in the first full year (up from more than $5 billion on a standalone basis) and more than $20 billion in stock in the first three years.

Ryan Lance, Chairman and CEO of ConocoPhillips, said: “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 position in the unconventional sector in the United States. »

“We remain committed to our differentiated cash flow from operations distribution framework of returning over 30% to our shareholders, with a track record of over 40% returns since resetting our strategy in 2016.”

ConocoPhillips ended the quarter with $6.3 billion in cash and short-term investments and $1.1 billion in long-term investments.

Investors can gain exposure to COP via IShares U.S. Oil & Gas Exploration & Production ETF (BATS:YES) And Westwood Salient Enhanced Energy Income ETF (NASDAQ:WEEE).

Investors can gain exposure to MRO via Invesco S&P 500 Equal Weight Energy ETF (NYSE:RSPG) And First Trust AlphaDEX Energy Fund (NYSE:FXN).

Price action: COP shares are down 2.80% at $115.63, while MRO shares are up 8.32% at $28.65 pre-market at last check Wednesday.

Photo via Shutterstock

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