ConocoPhillips to buy Marathon Oil in $22bn deal

ConocoPhillips confirmed on Wednesday that it has agreed to buy Marathon Oil in an all-share deal worth $22bn.

Under the terms of the agreement, Marathon shareholders will receive 0.2550 shares of ConocoPhillips common stock for each of their shares. This represents a 14.7% premium to the closing share price on Tuesday.

The acquisition will add "highly complementary" acreage to ConocoPhillips’ existing US onshore portfolio, with over 2 billion barrels of resource with an estimated average point forward cost of supply of less than $30 per barrel WTI.

ConocoPhillips chairman and chief executive Ryan Lance said: "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.

"Importantly, we share similar values and cultures with a focus on operating safely and responsibly to create long-term value for our shareholders. The transaction is immediately accretive to earnings, cash flows and distributions per share, and we see significant synergy potential."

The deal is expected to be immediately accretive to ConocoPhillips on earnings, cash from operations, free cash flow and return of capital per share to shareholders.

ConocoPhillips said it expects to achieve the full $500m of cost and capital synergy run rate within the first full year following closing of the transaction. The identified savings will come from reduced general and administrative costs, lower operating costs and improved capital efficiencies, it said.