Source: Zhitong Finance

Wednesday,$ConocoPhillips (COP.US)$Agreed to acquire at a corporate value of $22.5 billion$Marathon Oil (MRO.US)$, which includes $5.4 billion in net debt. According to the terms of the deal, Marathon Petroleum's shareholders will exchange 0.255 shares of ConocoPhillips common stock for each share of Marathon Petroleum's common shares, a 14.7% premium over Tuesday's closing price. Marathon Oil's US stock surged ahead of the market and is now up nearly 11%.

ConocoPhillips said the acquisition will add highly complementary space to its existing US onshore portfolio, increase resources by more than 2 billion barrels, and expect an average supply cost of less than 30 US dollars/barrel.

Given the contiguous nature of the acquired assets, the company said it expects to achieve a cost and capital co-operation rate of 500 million US dollars within the first full year after the transaction is completed. ConocoPhillips also said that it is expected that starting from the fourth quarter, its ordinary basic dividend will increase by 34% to $0.78 per share, and plans to repurchase more than 20 billion US dollars of shares in the first three years after the transaction is completed, and more than 7 billion US dollars for the full year of the first year. According to people familiar with the matter, ConocoPhillips and$Devon Energy (DVN.US)$There has been a battle for weeks for the chance to buy Marathon Oil.

The US oil and gas industry is busy with mergers and acquisitions

The US oil and gas industry has been busy with mergers and acquisitions, and the wave of mergers and acquisitions set off in 2023 continues until this year. In October of last year,$Exxon Mobil (XOM.US)$The $59.5 billion acquisition of Pioneer Natural Resources was announced, and the deal was approved by US regulators earlier this month. According to reports, the merged company has more than 1.4 million net acres of oil fields in Delaware and Midland basins in the US, and is estimated to have 16 billion barrels of oil equivalent resources.

Also in October of last year,$Chevron (CVX.US)$Spending $53 billion to buy America's fourth-largest oil company$Hess Corp (HES.US)$. Once the acquisition is complete, Chevron will own 30% of Guyana's Stabroek block.

In December of last year,$Occidental Petroleum (OXY.US)$The acquisition of CrownRock and its important assets in the Permian Basin was announced for approximately $12 billion. Prior to that, ConocoPhillips and Devin Energy were all potential bidders. Claimed to be worth between $10 billion and $15 billion, CrownRock has net area assets of approximately 8.6 million acres in the northern Midland Basin of Texas, which is part of the Permian Basin.

The reason for the popularity of mergers and acquisitions: the development cost of shale oil in the Permian Basin is low

The merger between ExxonMobil and Pioneer Natural Resources is the oil giant's biggest move into the Permian Basin and will integrate large areas of the Permian Basin. Previously, production in the Permian Basin had always been scattered, and was mainly the site of independent producers. When shale oil production in the basin began to surge around 2005, big companies like ExxonMobil were nowhere to be found.

Large oil companies initially avoided the Permian Basin because they doubted that the oil wells there would produce enough crude oil in a long enough period of time to generate huge profits. It is now clear that low-cost, easy-to-drill shale wells enable oil companies to rapidly increase production when needed. It marks a revolutionary transformation of major oil companies' large-scale offshore projects, which usually cost billions of dollars and require ten years of planning. The Permian Basin later became the most productive oil field in the Western Hemisphere, making the United States the world's largest producer of oil fields.

Editor/jayden