ConocoPhillips Will Acquire Concho Resources

The Largest US Oil Deal Since Before the Pandemic

ConocoPhillips (COP) has reached an agreement to acquire Concho Resources (CXO) for $9.7 billion in an all-stock transaction. This will be the largest oil deal in the US since the COVID-19 pandemic began.

ConocoPhillips is the top oil producer in Alaska. Its acquisition of Concho Resources will give the company a more significant presence in the Permian Basin of Texas and New Mexico. When the deal closes, the new combined entity will be the biggest US oil independent and will pump 1.5 million barrels of oil per day.

Other Oil Industry Tie-Ups

The US oil industry has seen an uptick in merger and acquisition activity recently as companies continue to struggle with sparse demand and low prices. Since June, oil prices have stayed at about $40 per barrel, which is lower than what many companies need to make a profit on new shale wells.

Last month, Devon Energy (DVN) agreed to a $2.6 billion merger with WPX Energy (WPX). In July, Chevron (CVX) agreed to purchase Noble Energy for $5 billion. These were both all-stock deals, like the ConocoPhillips-Concho Resources deal.

The Advantage of Joining Forces

Both ConocoPhillips and Concho have faced significant challenges this year. As of the end of last week, Concho’s shares have dropped by about 25% over the past year while the S&P 500 index climbed by 17%. ConocoPhillips’ share price has fallen by about 38% during the same period.

The companies are hoping that joining forces will help them better respond to changes in the oil industry. ConocoPhillips said the combined company will be able to reduce costs by $500 million per year by 2022. The companies also plan to use their combined efforts to lower greenhouse gas emissions. The deal is expected to close early in 2021.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS102001