ConocoPhillips in talks to acquire Marathon Oil, FT reports

(Bloomberg) — ConocoPhillips is moving ahead in talks to acquire Marathon Oil Corp., according to people familiar with the matter, in a move that would unleash a major wave of consolidation in the U.S. oil and gas industry.

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An announcement could be made as early as Wednesday in New York. According to the Financial Times, which previously reported on the potential deal, the target price of the all-stock offer would be slightly higher than its market capitalization of about $15 billion.

Adding Marathon, which focuses almost entirely on the U.S., would expand Conoco's presence in domestic shale regions from Texas to North Dakota. It would join a number of recent big deals as producers seek to reduce costs and bet that oil and gas demand will remain strong in the years ahead.

Read more: US oil deal in full swing, Chevron agrees to buy Hess

Marathon rose 6.2% in premarket trading Wednesday, while Conoco declined.Both companies did not respond to requests for comment from Bloomberg News outside normal business hours.

Conoco is among a handful of major drillers — including Exxon Mobil Corp. and Chevron Corp. — that are seeking production growth through acquisitions. The company has already expanded in the Permian Basin in recent years through its $13 billion acquisition of Concho Resources Inc. and a smaller purchase of Shell PLC’s assets in the region.

FT said it has been vying with its smaller rival Devon Energy Corp. for weeks to buy Marathon. Devon held talks about a possible combination last year, people familiar with the matter told Bloomberg News at the time.

–With assistance from Subrat Patnaik and David Stringer.

(Updated first and second paragraphs with source)

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