In total, the company projects $500 million in net cash flow improvement. ConocoPhillips, Bloomberg reported, had been hinting about a potential deal for months. The merger creates a combined resource base of about 23 billion barrels of oil equivalent with a less than $40 per barrel West Texas intermediate cost of supply and an average cost of supply below $30 per barrel WTI, the companies said. You have 3 free articles remaining. Action Alerts PLUS is a registered trademark of TheStreet, Inc. ConocoPhillips  (COP) - Get Report reached an agreement to acquire rival Concho Resources  (CXO) - Get Report in an all-stock deal valued at $9.7 billion. Quotes displayed in real-time or delayed by at least 15 minutes. Consolidation Bloomberg had reported last week that ConocoPhillips was in talks to buy Concho Resources. The deal would create “a better capitalized company” with “more flexibility” to adapt to the evolving shale industry.  |  Concho, a Permian pure-play, is the fifth-largest producer by volume in the massive field. The deal is … ConocoPhillips on Monday agreed to buy U.S. shale oil producer Concho Resources Inc for $9.7 billion, as the energy sector continued to consolidate amid lower fuel prices and demand. The deal also presents substantial cost-savings potential. Powered and implemented by FactSet Digital Solutions. Receive full access to our market insights, commentary, newsletters, breaking news alerts, and more. Canada would account for the rest.ConocoPhillips is also a major natural gas marketer. We like the distinctives each firm brings too. In July, Lance said the company was encouraged by the low premiums needed for acquisitions in the shale sector, citing Chevron’s  (CVX) - Get Report deal to buy Noble Energy  (NBL) - Get Report for about $5 billion. The company’s 2Q2020 production was down 24% in response to the pandemic’s demand destruction. 1.800.427.5747 While touting a posture of disciplined spending to investors, Lance also signaled that the independent would seek to capitalize on the oil slump with a Lower 48 acquisition that would drive growth at a time when organic expansion is difficult to generate. “We’re looking at asset deals, we’re looking at asset deals, we’re looking at corporate deals, we look across the board,” Lance told Bloomberg at the time. Upstream, email GET FOX BUSINESS ON THE GO BY CLICKING HERE. “And so, in the discussions, I think that’s more of what I hear, is around how to be more efficient. “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,” Leach said. Concho Resources has a market value of about $9.56 billion, while the market cap for ConocoPhillips is $36.22 billion. © 2020 TheStreet, Inc. All rights reserved. The sector has been consolidating after many shale producers borrowed in a bet on higher prices. The combined company is forecast to have an enterprise value of $60 billion. The, low-premium, all-stock deal comes as many U.S. shale companies have been mired in losses due to weak crude prices and, unlike in past downturns, have struggled to raise new capital to restructure heavy debts. The deal is expected to close in the first quarter of 2021. ConocoPhillips on Monday announced it is taking over Concho Resources Inc. for $9.7 billion in stock, forming a giant in the Permian Basin that would rival the output of the biggest players in the nation’s most productive oilfield. ConocoPhillips said on Monday it would buy Permian-focused driller Concho Resources for $9.7 billion, the largest shale deal this year as oil and gas … ConocoPhillips said after its deal with Concho closes, it would hold about 23 billion boe resources with an average cost of supply below $30/bbl West Texas Intermediate crude. View Subscription Options Obviously, this is one way to be more efficient.”. Under the terms of the merger, Concho investors would trade each existing share for 1.46 ConocoPhillips share, a 15% premium over the closing price on … Of the 1.5 million boe/d of proforma production, 50% would come from the Lower 48 and another 15% from Alaska. “The combined equity will continue to provide a solid investment opportunity to own crude leverage when the environment improves,” Tudor, Pickering, Holt & Co. analysts said. “There’s just a lot of costs associated with operating all these different companies. Midland, TX-based Concho produced 319,000 bbl in the second quarter, more than six times the volumes that ConocoPhillips pumped in the Permian. Management expects to fully realize the cost savings by 2022. Conoco is a major producer in two other U.S. shale fields, but pumps about 50,000 bpd in the Permian. ConocoPhillips is a multinational corporation engaged in hydrocarbon exploration.It is based in the Energy Corridor district of Houston, Texas.. IHS Markit Vice Chairman Daniel Yergin shares his thoughts on U.S. oil recovery and the U.S. staying in the fracking business. ConocoPhillips expects to take out $100 million in annual direct costs from senior staff and corporate expenses, $250 million in global exploration costs and another $150 million at the business unit level. This material may not be published, broadcast, rewritten, or redistributed. The deal values Concho Resources at $49.30 a share. Mutual Fund and ETF data provided by Refinitiv Lipper. The acquisition of Concho would substantially increase ConocoPhillips’ net acreage in the Permian to 700,000 net acres from about 170,000. ConocoPhillips (COP) - Get Report reached an agreement to acquire rival Concho Resources (CXO) - Get Report in an all-stock deal valued at $9.7 billion. Halliburton Co. CEO Jeff Miller, during a 3Q2020 earnings conference call on Monday, was asked about the spate of consolidation. Following months of cost-cutting, production in the U.S. oil patch has dropped from nearly 13 million b/d before the pandemic to about 11 million b/d. ConocoPhillips, formed by the 2002 merger of Conoco and Phillips Petroleum, grew into the third largest oil company in the United States.

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