M&A moves

ConocoPhillips buying Marathon Oil for $17.B in all-stock deal as energy prices rise

The deal to combine the two Houston-headquartered companies is valued at $22.5 billion when including $5.4 billion in debt. Photo via conocophillips.com

ConocoPhillips is buying Marathon Oil in an all-stock deal valued at approximately $17.1 billion as energy prices rise and big oil companies reap massive profits.

The deal to combine the two Houston-headquartered companies is valued at $22.5 billion when including $5.4 billion in debt.

Crude prices have jumped more than 12% this year and the cost for a barrel rose above $80 this week. Oil majors put up record profits after Russia's invasion of Ukraine in 2022 and while those numbers have slipped, there has been a surge in mergers between energy companies flush with cash.

Chevron said last year that it was buying Hess in a $53 billion acquisition, though that deal faces headwinds. The company warned the buyout may be in jeopardy because it will require the approval of Exxon Mobil and a Chinese national oil company, which both hold rights to development of an oil field off the coast of the South American nation Guyana where Hess is a big player.

In July of last year, Exxon Mobil said that it would pay $4.9 billion for Denbury Resources, an oil and gas producer that has entered the business of capturing and storing carbon and stands to benefit from changes in U.S. climate policy. Three months later, Exxon announced the proposed acquisition of shale operator Pioneer Natural Resources for $60 billion.

All of the proposed acquisitions could face pushback from the U.S. which, under the Biden administration, has stepped up antitrust reviews for energy companies and other sectors as well, such as tech.

Federal Trade Commission, which enforces federal antitrust law, asked for additional information from Exxon and Pioneer about their proposed deal. The request is a step the agency takes when reviewing whether a merger could be anticompetitive under U.S. law. Pioneer disclosed the request in a filing in January.

As part of the ConocoPhillips transaction, Marathon Oil shareholders will receive 0.2550 shares of ConocoPhillips common stock for each share of Marathon Oil common stock that they own, the companies said Wednesday.

ConocoPhillips said Wednesday that the transaction will add highly desired acreage to its existing U.S. onshore portfolio.

“This acquisition of Marathon Oil further deepens our portfolio and fits within our financial framework, adding high-quality, low cost of supply inventory adjacent to our leading U.S. unconventional position,” ConocoPhillips Chairman and CEO Ryan Lance said in a prepared statement.

The deal is expected to close in the fourth quarter. It still needs approval from Marathon Oil stockholders.

Separate from the transaction, ConocoPhillips said that it anticipates raising its ordinary dividend by 34% to 78 cents per share starting in the fourth quarter. The company said that once the Marathon Oil deal closes and assuming recent commodity prices, ConocoPhillips plans to buy back more than $7 billion in shares in the first full year. It plans to repurchase more than $20 billion in shares in the first three years.

Shares of ConocoPhillips declined 3.3% before the market open, while Marathon Oil Corp.'s stock rose more than 7%.

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A View From HETI

Greentown Labs announced it's receiving a percentage of Prithvi Ventures' proceeds. Photo courtesy of Greentown Labs

Effective immediately, Greentown Labs, which has locations in Houston and Somerville, Massachusetts, is benefitting from funds raised by an investment group.

Greentown Labs, a nonprofit climatetech incubator, announced its partnership with New York-based Prithvi Ventures, a firm that specializes in early-stage climatetech. The unique partnership includes Prithvi Ventures donating "a percentage of proceeds received from its Fund 1 and Fund 2 to Greentown on a quarterly basis, in perpetuity," per Greentown's news release. The exact percentage was not disclosed.

“There’s an understanding in sports that the best teams always take responsibility and accountability for their own and look out for each other—that the members of the team are a reflection of the franchise,” says Kunal Sethi, founder and general partner at Prithvi Ventures. “I have always believed the same to be true in venture, too.

"Founders should know their supporters, team, and cap tables inside and out. It matters who you surround yourself with and Greentown Labs is always the first name that comes up for me," he continues. "Every founder in climatetech should work with them or they’re missing out on so much.”

Prithvi Ventures already has a handful Greentown member companies in its investment portfolio, including Carbon Upcycling, Mars Materials, Nth Cycle, and Rheom Materials. The firm has invested in 30 companies total, and aims to lead rounds, preferring to be the first large check for the startups it invests in.

“We are delighted to deepen our relationship with Prithvi Ventures and are grateful for their ongoing support,” Aisling Carlson, senior vice president of partnerships at Greentown Labs, says in the statement. “Through this new partnership, Prithvi Ventures and its limited partners are setting an example for how the venture community can more directly support the incubators and accelerators working to catalyze climatetech innovation and entrepreneurship.”

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