ConocoPhillips and Marathon Oil Corporation have entered into a definitive agreement to merge in an all-stock transaction that will create one of the largest independent energy companies in the world. The combined company, to be known as ConocoPhillips, will have a pro forma enterprise value of approximately $66 billion and produce approximately 1.7 million barrels of oil equivalent per day.
The merger, which has been approved by the boards of directors of both companies, is expected to close in the fourth quarter of 2021. ConocoPhillips shareholders will own approximately 78% of the combined company, while Marathon Oil shareholders will own approximately 22%.
The combined company will have a balanced portfolio of high-quality assets across major basins in North America, Europe, Asia, Africa, and South America. ConocoPhillips' strong presence in the Permian Basin and Gulf of Mexico will be complemented by Marathon Oil's extensive operations in the Eagle Ford, Bakken, and Powder River basins.
The merger will also create a leading global deepwater player, combining ConocoPhillips' existing Gulf of Mexico operations with Marathon Oil's assets in the Norwegian North Sea, Brazil, and Angola. The combined company will have a portfolio of long-lived and cost-competitive projects that provide a solid foundation for growth.
In addition to its strong asset base, the merged company will benefit from a robust financial profile. ConocoPhillips has a strong track record of financial discipline and has consistently generated strong cash flows. The addition of Marathon Oil's cash flow will further enhance the combined company's financial flexibility.
The merger is expected to be accretive to earnings, cash flows, and return of capital per share. ConocoPhillips estimates that the merger will generate synergies of approximately $1 billion per year by 2023. These synergies will be achieved through a combination of operational efficiencies, reduced capital expenditures, and shared infrastructure.
The combined company will be led by Ryan Lance, current Chairman and CEO of ConocoPhillips. Michael Hennigan, current President and CEO of Marathon Oil, will join the combined company's executive leadership team.
The merger is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by the shareholders of both companies.
Analysts have praised the merger, highlighting its strategic benefits and potential for value creation.
"This is a transformative transaction that creates a global energy powerhouse," said Jason Gammel, an analyst at Jefferies. "The combined company will have a diversified portfolio of high-quality assets, a strong financial profile, and a clear path to growth."
"The synergies are significant and will drive substantial value creation for shareholders," said Philip Skolnick, an analyst at Credit Suisse. "The combined company will be better positioned to compete in the global energy market and deliver long-term growth."
The merger of ConocoPhillips and Marathon Oil is a landmark transaction that will create one of the largest and most competitive independent energy companies in the world. The combined company will have a strong asset base, a robust financial profile, and a clear path to growth. The merger is expected to be highly accretive to shareholders and is seen as a positive move for the energy industry.
