It is said that ConocoPhillips is almost ready to make an all-stock deal to buy Marathon Oil Corp. This will end years of consolidation among the big players in the industry.
That’s what Danilo Onorino, the portfolio manager of the Swiss-based Dogma Renovatio Equity Fund, says. He has been predicting oil deals since 2020, when the industry was still trying to recover from the effects of the pandemic.
“The consolidation comes after the COVID period,” he said. “That was the last spark of the energy transition.” “The energy transition will become more common over time,” Onorino said. “The oil and gas industry needs to come together even more.”
But now, he stressed, deals will mostly be made with second-tier players.
The Financial Times said on Wednesday that ConocoPhillips COP, +1.46% is close to completing an all-stock deal for Marathon MRO, +3.48% that could be worth more than $15 billion.
Sources say that Devon Energy DVN, +1.58% and Conoco have been competing to buy Marathon for a few weeks now. The report said that the deal might not go through.
We’ve asked Marathon MRO, +3.48% and ConocoPhillips COP, +1.46% for their thoughts on this.
The possible merger was made public just hours after shareholders in Hess Corp. HES, +0.44% agreed to Chevron Corp. CVX, +0.82%’s plan to buy the company for $53 billion. Pioneer Natural Resources was bought by Exxon Mobil Corp. for $60 billion, which is another big deal from the past year.
There was a deal in December for Occidental Petroleum OXY, +0.42%, a company owned by Berkshire Hathaway BRK.B, to buy U.S. shale oil producer CrownRock for $12 billion in cash and stock.
“From now on, we have second-tier deals in the oil and gas industry, with Diamondback, Devon Energy, Occidental Petroleum, Targa Resources, Williams Co., and maybe Schlumberger in the services industry,” he said. All of these companies could be taken over.
For his part, Onorino said that his company has been waiting for ConocoPhillips to buy something.
“The deal is the same as what Chevron made with Hess.” It’s defensive; it’s an all-stock deal that’s not meant to grow the industry but to make it stronger. Since the energy transition can’t be undone, businesses are on high alert. “You can slow it down, but not turn it around,” he said.
Not only did Onorino say that the oil services industry would likely merge, but he also said that similar changes could happen in the refining and marketing of oil.
The oil and gas sector XX:SXEP was the only group to move forward in early European trade. Integrated oil major BP BP, 1.53% went up 1%, and oil exploration company Aker BP AKRBP, 1.69% went up 2%.
