ConocoPhillips to acquire US shale producer Concho Resources for $9.7bn
ConocoPhillips acquisition of Concho Resources : US oil and gas giant ConocoPhillips has agreed to acquire Concho Resources, an unconventional shale producer in the Permian Basin, in an all-stock deal worth $9.7 billion. The deal is set to combine a couple of high-quality industry leaders to create a company with an enterprise value of nearly […]
ConocoPhillips acquisition of Concho Resources : US oil and gas giant ConocoPhillips has agreed to acquire Concho Resources, an unconventional shale producer in the Permian Basin, in an all-stock deal worth $9.7 billion.
The deal is set to combine a couple of high-quality industry leaders to create a company with an enterprise value of nearly $60 billion.
Post-merger, the enlarged ConocoPhillips is set to become the largest independent oil and gas firm with pro forma production of more than 1.5 million barrels of oil equivalent per day (MMBOED).
The combined firm will have close to 23 billion barrels of oil equivalent (BBOE) resources with an average cost of supply of under $30 per barrel WTI.
According to the parties, their merger brings together contiguous and complementary acreage positions in the Delaware and Midland basins to create an unconventional shale producing giant. The combined firm is also expected to enjoy leading positions in the Eagle Ford and Bakken in the Lower 48 and also in the Montney Formation in Canada.
ConocoPhillips further stated that the expanded position in the Permian Basin offers it a strong complement to its other diverse, low-capital-intensity legacy positions across the world.
ConocoPhillips acquisition of Concho Resources. Photo courtesy of ConocoPhillips Company.
Ryan Lance – ConocoPhillips chairman and CEO, commenting on ConocoPhillips acquisition of Concho Resources, said: “The leadership and boards of both companies believe today’s transaction is an affirmation of our commitment to lead a structural change for our vital industry.
“Concho is a tremendous fit with ConocoPhillips. Together, ConocoPhillips and Concho will have unmatched scale and quality across the important value drivers in our business: an enviable low cost of supply asset base, a strong balance sheet, a disciplined capital allocation approach, ESG excellence and great people. Importantly, the transaction meets our long-stated and clear criteria for mergers and acquisitions because it is completely consistent with our financial and operational framework.”
As per the terms of the deal, Concho Resources’ shares will be exchanged for a fixed ratio of 1.46 shares of ConocoPhillips’ shares.
Commenting on ConocoPhillips acquisition of Concho Resources, Tim Leach -chairman and CEO of Concho Resources, said: “Through this combination, we are joining a diversified energy company with even more scale and resources to create shareholder value in today’s markets and beyond.
“Thanks to our team, Concho is one of the largest unconventional shale producers in the United States, with a high-quality asset base, a culture of operational excellence, safety and efficiency, and a strong balance sheet.
“Through consolidation, we will apply our assets, capabilities and superior performance to the business model of the future, creating a better-capitalized company with enhanced capital discipline, more flexibility and an unwavering commitment to sustainability.
“From our position of strength and in light of market trends, our board of directors and management team evaluated a wide range of options and unanimously determined that combining with ConocoPhillips is the best path forward for Concho and our shareholders.”
The closing of ConocoPhillips acquisition of Concho Resources, which is subject to the approval of both the firms’ stockholders, regulatory approvals, and other customary closing conditions, is likely to occur in Q1 2021.