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ConocoPhillips Acquiring Marathon Oil Corporation for $22.5B

May 30, 2024 | News, Oil & Gas

ConocoPhillips

Not to be confused with Marathon Petroleum, operator of the Kenai Refinery and a facility in Anacortes, Washington that refines much of the North Slope’s crude oil output, Marathon Oil Corporation has agreed to a $22.5 billion takeover by ConocoPhillips.

Two Houston Neighbors

Alaska’s largest oil producer entered into a definitive agreement with Marathon Oil for an all-stock transaction, taking on $5.4 billion of net debt. Marathon Oil shareholders will receive 0.255 shares of ConocoPhillips common stock for each share of Marathon Oil common stock, representing a 14.7 percent premium to the closing share price of Marathon Oil as of May 28, 2024.

“This acquisition of Marathon Oil further deepens our portfolio and fits within our financial framework, adding high-quality, low cost of supply inventory adjacent to our leading US unconventional position,” says Ryan Lance, ConocoPhillips chairman and CEO. “Importantly, we share similar values and cultures with a focus on operating safely and responsibly to create long-term value for our shareholders.”

Both companies are based in Houston, Texas. ConocoPhillips World Headquarters is located about 5 miles west of Marathon Oil along the Katy Tollway segment of Interstate 10. Marathon resisted a hostile takeover by Mobil Oil in 1981 and instead became a sister company of US Steel. In 2011, it spun off its refining arm as Marathon Petroleum. Separate from Marathon Oil, Marathon Petroleum also owned the Speedway chain of gas station convenience stores until selling the chain to a holding company in 2021 for $21 billion.

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June 2024

Pending approval by Marathon Oil stockholders, regulatory clearance, and other customary closing conditions, the transaction is expected to close in the fourth quarter of 2024.

“This is a proud moment to look back on what we achieved at Marathon Oil,” says Lee Tillman, Marathon Oil chairman, president, and CEO. “ConocoPhillips is the right home to build on that legacy, offering a truly unique combination of added scale, resilience, and long-term durability.”

The acquisition adds to ConocoPhillips’ Lower 48 portfolio, adding more than 2 billion barrels of onshore resource.

Given the adjacent nature of Marathon Oil’s assets and operating philosophy, ConocoPhillips expects to achieve $500 million in cost and capital synergy within the first full year. Savings will come from reduced general and administrative costs, lower operating costs, and improved capital efficiencies. The companies plan to buy back more than $20 billion worth of stock in the first three years.

Evercore is serving as ConocoPhillips’ financial advisor, and the legal advisor for the transaction is Wachtell, Lipton, Rosen & Katz. Morgan Stanley is serving as Marathon Oil’s financial advisor, and Kirkland & Ellis is Marathon Oil’s legal advisor.

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June 2024
Welcome to the June 2024 issue, which features our annual Transportation Special Section. We've paired it this year with a focus on the Pacific Northwest and Hawai'i, as Alaska has close ties to both that reach far beyond lines of transportation. Even further out past our Pacific Ocean compatriots and our Canadian neighbors to the east, Alaska's reach extends to India and Singapore. Enjoy this issue that explores many of Alaska's far-flung business dealings.
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