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Marathon Oil (MRO) Stocks Up 8.4% on Buyout Deal by Conoco
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In a major energy sector development, ConocoPhillips (COP - Free Report) has struck an all-stock deal to buy rival Marathon Oil Corporation (MRO - Free Report) for $22.5 billion, including debt. This would consolidate Conoco’s position in America’s shale fields.
Over the past year, there have been multiple deals where large energy sector companies have been buying out whatever remains of the once vast shale resources. Companies like Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) kickstarted these acquisitions, and others followed suit. Exxon Mobil acquired Pioneer Natural Resources in a $60 billion deal, while Chevron’s offer of a $53 billion buyout of Hess has recently been approved.
COP is the latest oil behemoth to join the party. Earlier in the year, it lost out on a similar deal, but this marks its biggest acquisition deal since 2021.
Per Wednesday’s agreement, shareholders from MRO will receive 0.255 shares of COP for each share they own. On the news, shares in Marathon Oil jumped 8.4% in the session, while Conoco shares slid 3.1%. ConocoPhillips expects cost savings of $500 million in the first year after the closing of the transaction, which is expected to be sometime in the fourth quarter of 2024. This would add more than 2 billion barrels to COP’s reserves.
ConocoPhillips’ stock price has stayed relatively flat year to date, while its expected earnings growth rate for the current year is at 4%. The Zacks Consensus Estimate for its current-year earnings has improved 3.5% over the past 60 days. The company currently has a Zacks Rank #3 (Hold) and a VGM Score of A.
Marathon Oil’s stock, however, has been rising in 2024. Its expected earnings growth rate for the current year is at 10.7%. The Zacks Consensus Estimate for its current-year earnings has improved 15.1% over the past 60 days. The company currently carries a Zacks Rank #3 and a VGM Score of B.
While making the announcement, ConocoPhillips CEO Ryan Lance said, "We're heading into a period of kind of Shale 2.0, which is more about using technology and efficiencies, data analytics and some of the refrack potential that allows us to extend some tier one inventory." Last quarter, COP was the third largest oil and gas producer by volume in the Permian, the biggest U.S. shale oil field. The acquisition of MRO would bolster its efforts even further.
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Marathon Oil (MRO) Stocks Up 8.4% on Buyout Deal by Conoco
In a major energy sector development, ConocoPhillips (COP - Free Report) has struck an all-stock deal to buy rival Marathon Oil Corporation (MRO - Free Report) for $22.5 billion, including debt. This would consolidate Conoco’s position in America’s shale fields.
Over the past year, there have been multiple deals where large energy sector companies have been buying out whatever remains of the once vast shale resources. Companies like Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) kickstarted these acquisitions, and others followed suit. Exxon Mobil acquired Pioneer Natural Resources in a $60 billion deal, while Chevron’s offer of a $53 billion buyout of Hess has recently been approved.
COP is the latest oil behemoth to join the party. Earlier in the year, it lost out on a similar deal, but this marks its biggest acquisition deal since 2021.
Per Wednesday’s agreement, shareholders from MRO will receive 0.255 shares of COP for each share they own. On the news, shares in Marathon Oil jumped 8.4% in the session, while Conoco shares slid 3.1%. ConocoPhillips expects cost savings of $500 million in the first year after the closing of the transaction, which is expected to be sometime in the fourth quarter of 2024. This would add more than 2 billion barrels to COP’s reserves.
ConocoPhillips’ stock price has stayed relatively flat year to date, while its expected earnings growth rate for the current year is at 4%. The Zacks Consensus Estimate for its current-year earnings has improved 3.5% over the past 60 days. The company currently has a Zacks Rank #3 (Hold) and a VGM Score of A.
Marathon Oil’s stock, however, has been rising in 2024. Its expected earnings growth rate for the current year is at 10.7%. The Zacks Consensus Estimate for its current-year earnings has improved 15.1% over the past 60 days. The company currently carries a Zacks Rank #3 and a VGM Score of B.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
While making the announcement, ConocoPhillips CEO Ryan Lance said, "We're heading into a period of kind of Shale 2.0, which is more about using technology and efficiencies, data analytics and some of the refrack potential that allows us to extend some tier one inventory." Last quarter, COP was the third largest oil and gas producer by volume in the Permian, the biggest U.S. shale oil field. The acquisition of MRO would bolster its efforts even further.