ConocoPhillips has agreed to buy Concho Resources in an all-stock transaction valued at $9.7 billion, creating one of the biggest presences in US shale. It is the largest US shale acquisition in 2020 to date, surpassing Chevron’s $5 billion acquisition of Noble Energy in July.
With the acquisition, ConocoPhillips will hold approximately 23 billion BOE in its portfolio, with pro forma production of more than 1.5 million BOED. By adding Concho’s 550,000 net acres in the Delaware and Midland Basins, ConocoPhillips will become one of the largest companies operating in the Permian. The company said in a statement that the enhanced Permian position will provide a “strong complement” to its acreage in the Eagle Ford and the Bakken.
“Concho is a tremendous fit with ConocoPhillips,” said Ryan Lance, Chairman and CEO of ConocoPhillips. “Together, we will have unmatched scale and quality across the important value drivers in our business. 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.”
Robert Clarke, Vice President of Lower 48 Upstream at Wood Mackenzie, said the merger should bode well of for the Permian’s long-term outlook: “The combination is remarkable. Just in regards to scale, ConocoPhillips is adding enough Permian production to nip at the heels of ExxonMobil’s massive program. Concho has a history of acquisitions in the region and brings a considerable amount of incumbent Permian knowledge. ConocoPhillips has proven itself as a leader in shale technology.”
The transaction is subject to the approval of both ConocoPhillips and Concho stockholders, regulatory clearance and other customary closing conditions. The transaction is expected to close in Q1 2021.