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ConocoPhillips is in advanced talks to buy Marathon Oil in a potential all-stock deal that would value the Houston-headquartered target company at a little over its current $15bn market value, people briefed on the matter said.
Although a deal appeared to be imminent late on Tuesday night there was still a risk the negotiations would fall apart or that a rival bidder would gatecrash Conoco’s takeover plan.
The transaction would be the latest in a series of mega deals that have reshaped the US energy sector over the past eight months, as large oil companies seek to snap up the country’s best remaining shale resources and consolidate a once-fragmented sector.
ExxonMobil and Chevron last October both agreed massive acquisitions, with price tags of $60bn and $53bn respectively, sparking a wave of transactions across the sector, with companies including Occidental Petroleum and Diamondback Energy following suit.
Conoco — the biggest independent producer globally with a market capitalisation of about $139bn — has been vying with its smaller rival Devon Energy to acquire Marathon for several weeks, three people briefed on the matter said.
Bloomberg reported in October that Devon had held preliminary talks about a combination with Marathon.
Conoco and Marathon did not respond to requests for comment about the prospective tie-up.
Earlier this year, Conoco lost out to Diamondback in a race to snap up Endeavor Energy Resources, one of the most sought-after private producers in the prolific Permian Basin of Texas and New Mexico.
Diamondback agreed a $26bn deal to buy Endeavor in February after a last-ditch bid that left Conoco smarting, according to people close to that deal.
An acquisition of Marathon would be Conoco’s biggest since it acquired Concho Resources for $10bn in 2020, taking advantage of the Covid-induced downturn.
Conoco’s chief Ryan Lance said in March that consolidation was “the right thing to be doing for our industry”.
“Our industry needs to consolidate. There’s too many players. Scale matters, diversity matters in the business,” he said in an interview on CNBC.
Marathon owns assets ranging from North Dakota’s Bakken oilfield to Oklahoma, Texas and the New Mexico side of the Permian. It also holds an integrated gas business in Equatorial Guinea.
The company dates back to 1887, starting out as the Ohio Oil Company before being subsumed by JD Rockefeller’s Standard Oil. After almost a century as an integrated oil company it spun off its refining arm, Marathon Petroleum, in 2011.