ConocoPhillips Receives Second Request from FTC Regarding Marathon Oil Acquisition

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ConocoPhillips, the largest independent oil producer in the United States, announced on Friday that it has received a second request for information from the U.S. Federal Trade Commission (FTC) concerning its proposed acquisition of Marathon Oil. This request was issued to both ConocoPhillips and Marathon Oil on July 11, and both companies are currently cooperating with the FTC to facilitate a comprehensive review of the merger.

Acquisition Details and Industry Context

In May, ConocoPhillips unveiled its plan to acquire Marathon Oil in a stock-based deal valued at $22.5 billion. The acquisition aims to enhance ConocoPhillips’ production capabilities and achieve greater efficiencies through economies of scale in U.S. shale fields and the liquefied natural gas sector.

This proposed merger comes amid a wave of significant industry consolidation. For context, Exxon Mobil recently completed a $60 billion acquisition of Pioneer Natural Resources. Additionally, Chevron has proposed a $53 billion merger with Hess, while Chesapeake Energy has acquired Southwestern Energy for $7.4 billion. Occidental Petroleum also recently made a $12 billion bid for CrownRock.

Impact and Timeline

The FTC’s request for additional information is expected to delay the closing of the deal. ConocoPhillips had initially projected that the merger would be completed by the fourth quarter of this year. This timeframe is likely to be extended, which would delay the realization of anticipated cost savings and benefits from integrating shared equipment and staff. The company reaffirmed this estimated timeline in its latest statement.

 Operational Scale and Financial Terms

The merger between ConocoPhillips and Marathon Oil would result in a combined entity with a production capacity of 2.26 million barrels of oil and gas per day. Additionally, the merger would add approximately 1.32 billion barrels of proved reserves to ConocoPhillips’ existing 6.8 billion barrels.

The acquisition offer involves ConocoPhillips exchanging 0.255 of its shares for each share of Marathon Oil, which represents a 14.7% premium over Marathon Oil’s share price prior to the announcement of the deal. 

Both companies have substantial operations in key shale regions, including West Texas, South Texas, and North Dakota, further highlighting the strategic significance of this merger in the U.S. oil and gas industry.