ConocoPhillips and Midland-based Concho Resources announced Monday morning that they have agreed to merge in a $9.5 billion all-stock transaction. The resulting combination will have an estimated enterprise value of about $60 billion.
The deal, anticipated over the last week, is the largest shale-oil consolidation transaction yet in an industry hit hard by COVID-19, in the form of low energy demand and continuingly depressed energy pricing.
The deal is the second largest upstream deal of this year, following on the heels of the $13 billion acquisition of Noble Energy by Chevron. But it eclipses other recent deals including the $5.6 billion acquisition of WPX by Devon in September.
Kelly Rose, legal and general counsel for Houston-based ConocoPhillips, leaned on Wachtell Lipton corporate partners Andrew Brownstein and Gregory Ostling in New York for assistance with the transaction. There were no Texas lawyers involved.
As he has in the past, Concho Resources GC Travis Counts sought the advice of Sullivan & Cromwell. The firm advised Concho in its $9.5 billion acquisition of RSP Resources in 2018 with a team led from New York by Joseph Frumkin and Krishna Veeraraghavan.
Goldman Sachs & Co. is serving as exclusive financial advisor to ConocoPhillips. Credit Suisse Securities and J.P. Morgan Securities are acting as financial advisors to Concho.
Under the terms of the transaction, which has been approved already by the board of directors of each company, each share of Concho common stock will be exchanged for a fixed ratio of 1.46 shares of ConocoPhillips common stock, representing a 15 percent premium to closing share prices on October 13.
The combined company will now hold “core-of-the-core” acreage positions across the Delaware and Midland basins, as well as leading positions in the Eagle Ford and Bakken, as well as the Montney shale play in western Canada.
“Through this combination, we are joining a diversified energy company with even more scale and resources to create shareholder value in today’s markets and beyond,” said Tim Leach, chairman and chief executive officer of Concho Resources. Leach is expected to join the ConocoPhillips board as executive vice president and president of the company’s Lower 48 operations.