ConocoPhillips to buy Marathon Oil

ConocoPhillips, considered one of the largest oil companies in the United States, has agreed to acquire its smaller rival Marathon Oil for $17.1 billion in stock plus an additional $5.4 billion in debt.

The acquisition "further deepens our portfolio and fits within our financial framework, adding high-quality, low-cost-of-supply inventory," ConocoPhillips CEO Ryan Lance said in a statement on Wednesday.

Additionally, ConocoPhillips stated that the acquisition of Marathon would add over 2 billion barrels to its portfolio, with an average supply cost of less than $30 per barrel. This transaction will also allow them to reduce costs by at least $500 million in the combined company.

The deal is still subject to regulatory approval and shareholder votes. The parties expect to finalize it during the fourth quarter of this year.

ConocoPhillips also revealed plans to increase its dividend by 34% by the end of this year and to repurchase more than $20 billion of its shares over the three years starting in 2025.

The purchase of Marathon Oil is the latest in a wave of acquisitions where large U.S. oil companies with record profits have been buying smaller competitors.

Wall Street values ConocoPhillips at around $140 billion, ten times larger than Marathon Oil.

The surge in oil deals is largely due to the strong recovery in commodity prices since the early days of the pandemic, when oil prices plummeted.

Marathon Oil, with significant oil fields in states like New Mexico, North Dakota, and Texas, as well as operations in Equatorial Guinea, began operating in the 19th century. Its predecessors were part of Standard Oil, founded by John D. Rockefeller, just like ConocoPhillips.