ConocoPhillips, with its $22.5-billion planned acquisition of Marathon Oil Corp., could become the third largest producer in the US Lower 48 behind ExxonMobil Corp. and Chevron/Hess, according to Wood Mackenzie analysis (OGJ Online, May 29, 2024).
“The addition of Marathon further solidifies ConocoPhillips in a league of its own, with few true peers. For ConocoPhillips, this is a diversified and balanced move across multiple geographies,” said Alex Beeker, research director, corporate research for Wood Mackenzie.
Overall, adding Marathon Oil’s 390,000 boe/d, ConocoPhillips will produce 2.3 MMboe/d, more than TotalEnergies and about the same as bp PLC. Some 1.5 MMboe/d will come from the US Lower 48, according to WoodMac analysis.
“Marathon provides ConocoPhillips with optionality and assets that immediately compete for capital. Marathon’s average well performance in the Bakken and Delaware over the past two years has exceeded ConocoPhillips. Upon closing, ConocoPhillips will become the largest Eagle Ford producer, a top three Bakken operator and remain a top five Delaware basin player based on gross operated production,” Beeker continued.
In contrast to recent oil and gas deals focused on the Permian basin, this one signals a commitment to Bakken and Eagle Ford plays, noted Ryan Duman, director, Americas upstream for Wood Mackenzie.
“Even though the deal increases ConocoPhillips’ Lower 48 concentration, the addition of Marathon’s non-Permian Lower 48 assets offers valuable diversification for the pro-forma entity,” said Duman. “Given ConocoPhillips’ impressive efficiency gains from activities like remote fracs and extensive use of simulfracs, we see significant potential for improvement on the Marathon assets. In the Eagle Ford, in particular, ConocoPhillips has been drilling roughly 50% faster than Marathon over the past year. And on top of that, its Eagle Ford wells have been over 10% more productive,” Duman said.
Marathon’s wells in the Bakken over the past 2 years “have been about twice as productive as ConocoPhillips,” he said. “While neither play will likely become a growth asset for ConocoPhillips, they will be able to provide good cash flow generation.”