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ConocoPhillips is in advanced talks to buy Marathon Oil in a potential all-stock deal that would value the Houston-based target company at slightly more than its current market value of $15 billion, people briefed on the matter said.
A deal appeared imminent Tuesday night, but there was still a risk that negotiations could fail or that a rival bidder would scuttle Conoco's takeover plan.
The transaction would be the latest in a series of mega deals that have reshaped the U.S. energy sector over the past eight months, as big oil companies seek to snap up the country's best remaining shale resources and consolidate a sector that was once fragmented.
Last October, ExxonMobil and Chevron agreed to massive acquisitions, with price tags of $60 billion and $53 billion respectively, sparking a wave of deals across the sector, followed by companies like Occidental Petroleum and Diamondback Energy.
Conoco, the world's largest independent producer with a market capitalization of about $139 billion, has been racing with smaller rival Devon Energy to acquire Marathon for several weeks, three people briefed on the matter said.
Marathon shares rose 6 percent in premarket trading in New York on Wednesday.
Bloomberg reported in October that Devon had held preliminary talks about a combination with Marathon.
Conoco and Marathon did not respond to requests for comment on the potential merger.
Earlier this year, Conoco lost to Diamondback in a race to take over Endeavor Energy Resources, one of the most sought-after private producers in the prolific Permian Basin of Texas and New Mexico.
Diamondback reached a $26 billion deal to buy Endeavor in February after a last-minute bid that left Conoco hurt, according to people close to that deal.
The Marathon acquisition would be Conoco's largest since it acquired Concho Resources for $10 billion in 2020, taking advantage of the Covid-induced recession.
Conoco boss Ryan Lance said in March that consolidation was “the right thing to do for our industry.”
“Our industry needs to consolidate. There are too many players. Scale matters, diversity matters in business,” she said in an interview on CNBC.
Marathon owns assets ranging from North Dakota's Bakken oil field to Oklahoma, Texas and the Permian side of New Mexico. It also has an integrated gas business in Equatorial Guinea.
The company dates back to 1887 and began as Ohio Oil Company before being absorbed by JD Rockefeller's Standard Oil. After nearly a century as an integrated oil company, it spun off its refining division, Marathon Petroleum, in 2011.
