Marathon Oil saw its stock price jump almost 11% on Wednesday with the announcement of a $22.5 billion merger deal with ConocoPhillips.
The stock price of the American hydrocarbon exploration company opened at $29.35 on the New York Stock Exchange, soaring 10.96% from its close of $26.45.
ConocoPhillips, on the other hand, saw its stock price decline 2.88% to $115.53 at 10.52 a.m. EDT, after closing Tuesday at $118.96.
The US-based oil and natural gas ConocoPhillips said Wednesday it agreed to acquire Marathon Oil in an all-stock deal with an enterprise value of $22.5 billion, which includes Marathon Oil’s $5.4 billion in debt.
The deal will add more than 2 billion barrels of resource to ConocoPhillips’ existing onshore portfolio in the US, according to the statement.
While it is expected to close in the fourth quarter, ConocoPhillips said it expects to achieve the full $500 million of cost and capital synergy run rate within the first full year following the closing of the agreement.
The announcement comes as mergers in the US oil and natural gas industry heat up.
US-based energy firm Hess Corporation said Tuesday it received the necessary approval from stockholders to close a $53 billion merger with the Chevron Corporation — the second largest energy firm in the nation.
That deal, however, may be at risk due to Guyana’s offshore oil assets, which are estimated to have nearly 11 billion oil-equivalent barrels of recoverable resource.
Under a joint agreement that operates Guyana’s offshore oil assets, China National Offshore Oil Corporation holds a 25% stake, Hess has 30% and ExxonMobil a 45% stake, as the latter initiated in March arbitration proceedings to assert its rights in the Stabroek oil block, which may prevent Hess’ merger with Chevron.
ExxonMobil, the US’ biggest energy company, announced in October it would buy Texas-based oil and natural gas explorer Pioneer Natural Resources for $64.5 billion, which includes the latter’s net debt.
That agreement will combine an estimated 16 billion barrels of oil equivalent resources in the shale oil-rich Permian Basin in west Texas, according to ExxonMobil.
ExxonMobil’s merger deal received the green light early this month from the Federal Trade Commission (FTC), but the US regulator barred Pioneer’s former CEO Scott Sheffield from gaining a seat on ExxonMobil’s board of directors or serving in an advisory capacity at Exxon once it acquires Pioneer.
The FTC alleged that Sheffield ‘attempted to collude’ with the representatives of the Organization of Petroleum Exporting Countries (OPEC) and other oil-producing countries known as OPEC+ to reduce output of oil and gas, which would result in Americans paying higher prices at the pump, to inflate profits for his company.
‘Through public statements, text messages, in-person meetings, WhatsApp conversations and other communications while at Pioneer, Sheffield sought to align oil production across the Permian Basin in West Texas and New Mexico with OPEC+,’ the FTC said May 2.
‘Sheffield, for example, exchanged hundreds of text messages with OPEC representatives and officials discussing crude oil market dynamics, pricing and output,’ it said. ‘Sheffield’s appointment to Exxon’s board also would be anticompetitive as he currently serves on the board of The Williams Companies, Inc., which operates a host of natural gas pipelines; natural gas gathering, processing, and treating assets; and other businesses that directly overlap with Exxon’s operations.’
