ConocoPhillips to buy Marathon Oil for $22.5 billion

ConocoPhillips has agreed to buy Marathon Oil for $22.5 billion, including $5.4 billion of net debt in an all-stock deal. Both companies have their head offices in west Houston.

The companies have adjacent acreage in the Eagle Ford, Bakken and the Permian Basins. Marathon also has assets in Oklahoma and Equatorial Guinea.

Both companies were part of Standard Oil until its breakup into 34 companies in 1911, following a Supreme Court Ruling. The descendant of Marathon (‘MRO’) started life as an amalgamation of a number of Ohio-based oil producers in 1887, before being acquired by Standard Oil in 1889. The descendant of Conoco (‘COP’) was founded in Utah in 1875 as Continental Oil and Transport Company and was bought by Standard Oil in 1884.

COP has identified $500 million of annualized savings from the deal. Half of that will come from the elimination of duplicate general and administrative expenses. $150 million of savings is expected from the optimization of operating and commercial costs. The remaining $100 million will come from reduced capital costs.

As a result of the deal, COP is increasing its ordinary dividend by 34% once the deal closes. It is also increasing its annualized share buybacks from $5 billion to $7 billion.

In March, MRO announced that CFO Dane Whitehead would be retiring on July 1. Rob White, the Controller and Chief Accounting Officer, was promoted to CFO, effective May 1. With today’s announcement, Mr. Whitehead has agreed to delay his retirement until the deal is closed. He will be an Executive VP and Advisor to the CEO.

The deal is expected to close in the four quarter of 2024.

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