US explorer ConocoPhillips to buy Marathon Oil in $17 billion deal

ConocoPhillips agreed to acquire Marathon Oil Corp in an all-stock deal valuing the company at about $17 billion, extending a major buying spree among the largest players in the oil and gas industry in the United States.

The move expands ConocoPhillips' footprint in domestic shale fields from Texas to North Dakota and hands the company reserves as far afield as Equatorial Guinea. It adds to a wave of recent megadeals as producers seek new drilling sites on a bet that oil and gas demand will remain robust for years to come.

The takeover deal represents a 14.7% premium to the last closing share price for Marathon, the companies said in a statement Wednesday. The deal has an enterprise value of $22.5 billion.


ConocoPhillips joins the ranks of major drillers pursuing production growth via recent acquisitions. In October, Exxon Mobil Corp accelerated the pace of Permian Basin consolidation with a $62 billion deal for Pioneer Natural Resources Co. That was followed later that month by Chevron Corp's agreement to buy Hess Corp for about $53 billion.

ConocoPhillips had already expanded in the Permian in recent years through a $13 billion takeover of Concho Resources Inc. and a $9.5 billion purchase of Shell Plc's assets in the region.

While acquisitions by Exxon and others focused largely on lining up future drilling sites, ConocoPhillips's play for Marathon is more about cutting costs in the ageing Eagle Ford and Bakken shale basins, analysts from Citigroup said in a research note. ConocoPhillips' shares were last trading 3.9% down in New York, while Marathon's were up 11%.

Although smaller than the massive deals struck by Exxon and Chevron, ConocoPhillips's takeover is still apt to face anti-trust scrutiny from the US Federal Trade Commission, which has been taking a more active interest in mergers.