OVV - ConocoPhillips Knocks It Out Of The Park With Purchase Of Marathon Oil

2024-05-31 09:38:24 ET

Summary

• Marathon Oil Corporation shares closed up 8.4% after the announcement of its acquisition by ConocoPhillips in a $22.5 billion all-stock deal.
• The transaction values Marathon Oil appropriately compared to similar companies, but the energy space as a whole appears undervalued.
• ConocoPhillips will gain significant assets in Equatorial Guinea and expects to generate $500 million in annual synergies from the acquisition.
• The terms of the deal make ConocoPhillips a big winner, though investors may want to consider a stake in Marathon Oil as well.

May 29th was a very good day for shareholders of Marathon Oil Corporation ( MRO ). Shares of the company closed up 8.4% after news broke that the business would be acquired by energy giant ConocoPhillips ( COP ) in an all-stock transaction , valuing the firm at $22.5 billion on an enterprise value basis. This nice bit of upside is certain to make investors happy. But to many, the long-term picture might be disappointing. Relative to similar companies, this transaction does value Marathon Oil appropriately. However, the space as a whole does look moderately undervalued....

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