Texas shale giant ConocoPhillips to takeover Concho in $9.7 billion all-stock deal

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Texas shale giant ConocoPhillips to takeover Concho in $9.7 billion all-stock deal

ConocoPhillips, the Houston, Texas-based American multinational hydrocarbon explorer operating in more than seventeen countries across the globe, had issued a statement on Monday saying that the oil giant would purchase a smaller US shale producer Concho Resources in a $9.7 billion buyout deal, which in effect would make the Texas-headquartered oil and natgas corporation a major player in the Permian Basin, the largest oil field in the United States.

Apart from that, the companies had also added in a joint statement released late on Monday that the combined entity, which would be subject to anti-trust approvals, would become one of the largest US oil producers following the merger with a daily output of 1.5 million barrels or roughly 2 per cent of the entire global crude oil production.

On top of that, had the merged entity been approved, it would be the sole owner of an approximated 23 billion barrels of oil resource having an enterprise valuation of roughly $60 billion.

ConocoPhillips set to purchase Concho as US shales scuffle to make ends meet

In point of fact, latest dilution of another US shale producer, Concho, came against a corrosive backdrop for the US shale industry, while a number of US shales had already filed for bankruptcy protection following a staggering nosedive of crude oil futures’ prices.

Notably, US shale producers require crude oil futures’ prices to hover above at least $40 per barrel in order to remain profitable, while crude futures’ prices have been down more than 30 per cent this year to date, anchoring below a critical $40 per barrel what a majority of US oil producers requires to break even.

Meanwhile, as 17 US oil and gas producers had filed for bankruptcy protection thus far this year, shrugging off nearly a fifth of a trillion-dollar US industry, the slated takeover of Concho, which is expected to close on Q1, 2021, would help ConocoPhillips Corp. save up to $500 million in annual expenses by 2022, said the companies in a joint statement.