ConocoPhillips Completes Acquisition of Permian Producer Concho Resources

The Houston-based oil and gas company has expanded its footprint in the liquids-rich Permian by more than 550,000 acres.

Source: Getty Images

ConocoPhillips said last week that it has finalized its acquisition of Permian Basin oil and gas company Concho Resources. The all-stock deal valued at $9.7 billion was announced in October amid a flurry of other mergers and acquisitions designed to consolidate the US shale sector.

“We appreciate the strong support for this transaction from the shareholders of both companies, which we view as further affirmation of the significant benefits it will deliver,” Ryan Lance, ConocoPhillips chairman and chief executive officer, said in the announcement.

ConocoPhillips’ purchase of its smaller rival has netted it an additional 550,000 acres and around 200,000 B/D in the Permian. The Houston-based oil and gas producer now holds about 1.5 million acres across the Lower 48 which hold an estimated 17,000 drilling locations that can generate profits at $40/bbl.

By the time the deal was announced, Concho was operating around 2,100 horizontal wells in the Permian while ConocoPhillips had less than 200.

Concho’s former CEO Tim Leach has also been appointed to the board of directors at ConocoPhillips and as the executive vice president of ConocoPhillips’ Lower 48 business unit.

The purchase price for Concho was set at $49.30 per share, representing a total equity value of $9.7 billion and a total enterprise value of $13.3 billion—making it the largest pure shale acquisition since BHP acquired Petrohawk for $15.1 billion in 2011.

After global crude prices collapsed starting in March of last year, many of the largest US shale producers responded by combining or selling out to larger companies. The value of all the transactions made in 2020 amounted to $52 billion, according to market research firm Enverus.