ConocoPhillips Offers $5.2 Billion Bonds to Refinance Debt

ConocoPhillips has placed a five-tranche note offering with a combined principal amount of $5.2 billion to refinance existing debt including $4 billion in debt securities assumed when it acquired Marathan Oil Corp.

The debt instrument sale consists of $1.35 billion due 2030 with a 4.7 percent interest, $650 million maturing 2032 with a 4.85 percent interest, $1.25 billion due 2035 with a five percent interest, $1.3 billion due 2055 with a 5.5 percent interest and $650 million due 2065 with a 5.65 percent interest, according to regulatory disclosures.

Houston, Texas-based ConocoPhillips named subsidiary ConocoPhillips Co. as issuer with the parent company guaranteeing 100 percent of the offering.

The offering is backed by Citigroup, JP Morgan, BofA Securities, HSBC, Mizuho, MUFG, SMBC Nikko, TD Securities, US Bancorp and Wells Fargo Securities as joint book-running managers.

ConocoPhillips has also enlisted BBVA, DNB Markets, Goldman Sachs & Co. LLC, Morgan Stanley, RBC Capital Markets and Standard Chartered Bank as senior co-managers, while Academy Securities is co-manager.

Each note is valued at least $2,000 and subscriptions exceeding the minimum must be in integral multiples of $1,000. The offering is scheduled to be completed by December 5.

ConocoPhillips will make semi-annual interest payments starting 2025.

The terms allow ConocoPhillips to redeem any of the notes any time at pre-determined prices.

It intends to use the proceeds, estimated to be $5.14 billion after deducting underwriting discounts and estimated expenses, to pay in cash outstanding notes issued by its subsidiaries including the $4 billion senior Marathon notes.

Alternatively, ConocoPhillips has offered to holders of the Marathon notes to cancel these notes in exchange for new debt securities that bear the same maturity dates and interest rates as the corresponding Marathon notes.

The six-tranche Marathon notes consist of $1 billion due 2027 with a 4.4 percent interest, $600 million due 2029 with a 5.3 percent interest, $550 million due 2032 with a 6.8 percent interest, $600 million due 2034 with a 5.7 percent interest, $750 million due 2037 with a 6.6 percent interest and $500 million due 2045 with a 5.2 percent interest.

“In connection with each of the Concurrent Tender Offer and Concurrent Exchange Offer, Marathon is also soliciting consents with respect to each series of Marathon Notes in order to amend the existing indentures governing the terms of the Marathon Notes to eliminate, modify or remove certain restrictive covenants, events of default and other provisions contained in the indentures”, ConocoPhillips told the Securities and Exchange Commission.

Separately it is “remarketing” $400 million of $1 billion municipal bonds issued by the Parish of St John the Baptist, Louisiana, for Marathon. ConocoPhillips has agreed to unconditionally provide $1 billion in guarantee for the total principal amount.

On November 22 ConocoPhillips announced it had completed its acquisition of Marathon after the $22.5 billion transaction cleared an extended regulatory anti-trust review.

“This acquisition of Marathon Oil is a perfect fit for ConocoPhillips, adding to our deep, durable and diverse portfolio while meeting our strict financial framework”, ConocoPhillips chair and chief executive Ryan Lance said in a company statement. “Marathon Oil adds high-quality, low-cost-of-supply inventory adjacent to our leading U.S. unconventional position.

“We have a strong history of seamlessly integrating assets and we expect to deliver synergies of over $1 billion on a run rate basis in the next 12 months”.

Marathon survives as a subsidiary. Marathon shareholders received 0.255 ConocoPhillips common shares for each common share they held at Marathon. ConocoPhillips paid cash for fractional shares. The total enterprise value of $22.5 billion includes $5.4 billion of Marathon net debt, according to the announcement of the merger agreement May 29.

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