ConocoPhillips to Acquire Permian Operator in $9.7B Deal

ConocoPhillips to Acquire Permian Operator in $9.7B Deal
ConocoPhillips agreed to buy Concho Resources Inc. for about $9.7 billion in stock.

“With Concho Resources’ stock down more than 40% in 2020, its sale to ConocoPhillips at a 15% premium to the Oct. 13 close may not assuage holders of a best-in-class Permian E&P that’s generating free cash flow and has less burdensome debt than smaller, independent peers. Concho had laid out a reasonable road map of modest production married with capital efficiency, and we thought it would be a consolidator, even given CEO Tim Leach’s history of selling two other iterations of Concho.”

--Vincent Piazza, senior industry analyst, and Evan Lee, associate analyst

Though the transaction may be good for shareholders, the extensive cost cuts mean it’s unlikely to benefit already declining U.S. oil production, or the companies like Halliburton Co. who provide drilling and other services. Halliburton said Monday that business outside the U.S. is still weak.

Goldman Sachs Group Inc. is Conoco’s financial adviser on the deal and Wachtell, Lipton, Rosen & Katz is its legal adviser. Credit Suisse Group AG and JPMorgan Chase & Co. are Concho’s financial advisers and Sullivan & Cromwell LLP is its legal adviser.

Concho’s shares rose 0.7% to $48.96 at 9:32 a.m. in New York while Conoco’s dropped 0.3% to $33.67.

© 2020 Bloomberg L.P.


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