ConocoPhillips to Proceed With $22.5M Acquisition of Marathon Oil

ConocoPhillips COP received shareholder approval to move forward with its planned merger with Marathon Oil Corporation MRO.

The all-stock transaction, valued at $22.5 billion and including $5.4 billion in net debt, was initially announced in May 2024. The merger is expected to close by the end of the fourth quarter of 2024.

Under the terms of the deal, Marathon Oil shareholders will receive 0.2550 shares of ConocoPhillips common stock for each share of Marathon Oil common stock.

ConocoPhillips emphasized the strategic benefits of the acquisition, highlighting that it would significantly enhance the company’s U.S. onshore portfolio. The merger is set to add more than 2 billion barrels of resources, with an estimated average cost of supply of less than $30 per barrel of WTI.

The acquisition aligns with ConocoPhillips’ financial strategy by bolstering its low-cost supply inventory and strengthening its position in the U.S. unconventional asset market. COP also underscored the shared values of safety and responsibility between the two companies, which is expected to drive consistent shareholder value.

Marathon Oil, which operates in key U.S. oil-producing regions such as the Bakken basin in North Dakota, the Permian basin in West Texas and the Eagle Ford basin in South Texas, brings valuable assets to the table. These regions are highly sought after by oil producers looking to expand their inventory.

Marathon Oil expressed confidence in ConocoPhillips as the ideal partner to advance the company’s legacy. The company noted the merger’s potential to enhance scale, resilience and long-term viability while creating substantial shareholder value through the integration of both companies’ assets and expertise.

As the transaction moves toward completion, both companies are optimistic about the synergies and growth opportunities it will create, aiming to leverage their combined strengths to achieve greater success in the oil industry.

Zacks Rank & Key Picks

Currently, ConocoPhillips carries a Zack Rank #3 (Hold).

Investors interested in the energy sector may look at the two companies mentioned below that presently sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Precision Drilling Corporation PDS is Canada’s largest drilling rig contractor. A provider of rentals, wellsite accommodations and snubbing services, Calgary-headquartered Precision Drilling has active operations in the United States, Mexico and Saudi Arabia.

The Zacks Consensus Estimate for PDS’s 2024 EPS is pegged at $6.59. The company has a Zacks Style Score of A for Value and B for Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

MPLX LP MPLX derives stable fee-based revenues from long-term contracts, with minimal exposure to commodity-price fluctuations. The partnership’s robust capital expenditure forecast for 2024, along with significant expansion initiatives, underscores its commitment to sustainable growth.

The Zacks Consensus Estimate for MPLX’s 2024 EPS is pegged at $4.29. The company has a Zacks Style Score of B for Value and A for Momentum. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.

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ConocoPhillips (COP) : Free Stock Analysis Report

Marathon Oil Corporation (MRO) : Free Stock Analysis Report

Precision Drilling Corporation (PDS) : Free Stock Analysis Report

MPLX LP (MPLX) : Free Stock Analysis Report

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