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Wednesday, January 20, 2021

ConocoPhillips Will Buy Concho Resources for $9.7 Billion

ConocoPhillips agreed on Monday afternoon to buy American shale oil producer Concho Resources for $9.7 billion, and the energy sector continued to consolidate amid lower oil prices and demand.

ConocoPhillips agreed on Monday afternoon to buy American shale oil producer Concho Resources for $9.7 billion, and the energy sector continued to consolidate amid lower oil prices and demand.

The deal swaps 1.46 shares of ConocoPhillips for each Concho share, an about 1.5 percent premium over its Thursday price. Shares of the oil producer were up 1.4 percent at $49.30 in early trading on Monday. 

Both companies sold for as much as $93 a share in January before the COVID-19 crisis cut oil demand and prices.

The low-premium, all-stock agreement between both companies comes as many American shale firms have been mired in losses because of the weak oil prices and, unlike in past downturns, have struggled to raise new capital to restructure heavy debts.

The fifth-largest producer by volume in the Permian, Concho pumps about 319,000 barrels per day, from wells spread across more than half a million acres. Conoco is one of the most important producers in two other American shale fields, but pumps about 50,000 barrels per day in the Permian.

“Concho has been on the short list of big Permian companies attracting interest due to its large production, vast acreage and relatively low debt,” M&A analyst at consultancy Enverus Andrew Dittmar said in a statement.

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