ConocoPhillips Faces FTC Scrutiny Over Marathon Oil Acquisition

Top independent oil producer ConocoPhillips announced on Friday that it has received a second request for information from the U.S. Federal Trade Commission (FTC) regarding its proposed acquisition of Marathon Oil. This request, which was also sent to Marathon Oil, was received on July 11 and marks a crucial step in the regulatory review process, potentially impacting the timeline of the merger.

The proposed acquisition, first announced in May, has been touted by ConocoPhillips as a strategic move that will be “immediately accretive” to its earnings and cash flow. The company projects that the merger will generate “at least $500 million of run rate cost and capital savings within the first full year following the closing of the transaction.” Despite these optimistic projections, the additional scrutiny from the FTC introduces a new layer of uncertainty.

The second request for information effectively delays the earliest possible date for the merger. Under FTC regulations, the companies must comply with the inquiry before they can proceed, pushing back the potential closing date to at least 30 days after both parties have fulfilled the FTC’s requirements. Initially, ConocoPhillips and Marathon Oil had anticipated completing the deal in the fourth quarter of 2024.

As part of the acquisition terms, Marathon Oil shareholders will receive 0.255 shares of ConocoPhillips stock for each share of Marathon they own. This exchange represents a premium of nearly 15% to Marathon’s closing price of $26.45 before the deal was announced, highlighting the attractiveness of the offer to Marathon shareholders.

While ConocoPhillips and Marathon Oil continue to cooperate with the FTC to expedite the review process, the outcome remains uncertain. The additional regulatory scrutiny reflects the significant impact the merger would have on the competitive landscape of the U.S. oil industry, necessitating a thorough evaluation to ensure compliance with antitrust laws and to safeguard market competition.

Industry analysts will be closely watching the developments in this case, as the successful completion of the acquisition could reshape the sector, bolstering ConocoPhillips’ position as a leading player in the market.