FTC Issues Second Request to ConocoPhillips and Marathon Oil on $22.5B Deal
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ConocoPhillips Receives Second FTC Request Regarding Marathon Oil Merger
ConocoPhillips, the leading independent oil producer in the U.S., announced on Friday that it has received a second request from the U.S. Federal Trade Commission (FTC) for more information concerning its planned acquisition of Marathon Oil. Both companies confirmed that they received these requests on July 11 and are currently collaborating with the FTC to review the merger proposal.
Deal Overview
In May, ConocoPhillips declared its intention to acquire Marathon Oil for $22.5 billion in stock. This strategic move is aimed at increasing its production and achieving enhanced economies of scale, particularly in U.S. shale fields and liquefied natural gas operations. This acquisition comes on the heels of several significant mergers in the industry, including Exxon Mobil's $60 billion deal for Pioneer Natural Resources, Chevron's proposed $53 billion merger with Hess, Chesapeake Energy's $7.4 billion acquisition of Southwestern Energy, and Occidental Petroleum's $12 billion bid for CrownRock.
Potential Delays
The additional information requested by the FTC is likely to prolong the closing of the deal. ConocoPhillips had previously projected a "conservative" timeline for the deal's completion by the fourth quarter of this year, which would delay the full realization of the anticipated cost savings and operational benefits arising from shared equipment and staff. On Friday, ConocoPhillips reaffirmed this estimated timeframe.
Operational Impact
Both ConocoPhillips and Marathon Oil operate in key U.S. shale fields, including West Texas, South Texas, and North Dakota. The merger between ConocoPhillips and Marathon Oil would result in a combined entity producing 2.26 million barrels of oil and gas per day and would add 1.32 billion barrels of proved reserves to ConocoPhillips’ existing 6.8 billion barrels.
Market Premium
The proposed deal involves an offer of 0.255 shares of ConocoPhillips for each share of Marathon, representing a 14.7% premium to Marathon Oil's pre-deal closing price.
