ConocoPhillips has finalized its acquisition of Marathon Oil Corporation, a $22.5 billion all-stock transaction that includes $5.4 billion in net debt. This strategic move, completed on November 22, 2024, is set to significantly enhance ConocoPhillips' portfolio by adding high-quality, low-cost-of-supply assets adjacent to its existing U.S. unconventional holdings.

Under the terms of the agreement, Marathon Oil shareholders received 0.255 shares of ConocoPhillips common stock for each share they owned. The company anticipates achieving over $1 billion in synergies on a run-rate basis within the next 12 months. Ryan Lance, Chairman and CEO of ConocoPhillips, stated, "This acquisition of Marathon Oil is a perfect fit for ConocoPhillips, adding to our deep, durable, and diverse portfolio while meeting our strict financial framework."

This acquisition positions ConocoPhillips as the third-largest producer in the U.S. Lower 48, with a combined production of approximately 1.5 million barrels of oil equivalent per day (boe/d), trailing only ExxonMobil and Chevron. The integration of Marathon Oil's assets is expected to bolster ConocoPhillips' presence in key shale regions, including the Eagle Ford in Texas and the Bakken in North Dakota.

The deal is part of a broader trend of consolidation within the U.S. shale oil and gas industry, which has seen nearly $200 billion in mergers and acquisitions over the past year. Major companies like ExxonMobil, Chevron, and Occidental Petroleum have been aggressively acquiring smaller rivals to achieve greater scale. This trend has reduced the number of publicly traded oil and gas companies in the U.S. from 65 to 41 in under five years.

Prior to the completion of the deal, Marathon Oil shareholders approved the acquisition in August 2024. The transaction underwent review by the Federal Trade Commission (FTC) before finalization. In July 2024, both companies received a second request for information from the FTC, indicating heightened regulatory scrutiny. Despite this, the deal closed on schedule in the fourth quarter of 2024.

The acquisition is expected to result in significant cost savings and operational efficiencies for ConocoPhillips. However, it also led to workforce reductions. In October 2024, Marathon Oil announced that more than 500 employees at its Houston headquarters would be laid off within the next 12 months as a result of the merger.

The consolidation trend in the oil and gas industry has broader economic implications, including potential impacts on employment, regional economies, and energy prices. While larger, more efficient companies may be better positioned to navigate market fluctuations, the reduction in competition could lead to higher prices for consumers.

The oil and gas industry has a history of mergers and acquisitions, particularly during periods of market volatility. However, the current wave of consolidation is notable for its scale and the involvement of major industry players. The ConocoPhillips-Marathon Oil deal is one of several significant mergers in recent years, reflecting a strategic shift towards consolidation to achieve greater efficiency and competitiveness.

As the industry continues to evolve, the implications of such mega-mergers will be closely monitored by regulators, industry stakeholders, and consumers alike.