ConocoPhillips swoops on Concho in $9.7bn all-stock deal

Speaking after ConocoPhillips announced it will take over Concho Resources in a $9.7 billion all-stock deal, Robert Clarke, vice president, Lower 48 upstream, at Wood Mackenzie, said: “The combination is remarkable. Just in scale, ConocoPhillips is adding enough Permian production to nip at the heels of ExxonMobil’s massive programme.

“We like the distinctives each firm brings too. Concho has a history of acquisitions in the region and brings a considerable amount of incumbent Permian knowledge.

“ConocoPhillips has proven itself as a leader in shale technology. This can be seen in how its Bakken and Eagle Ford projects have progressed down the cost curve as well as how successfully it manages later-life shale declines.

“The combination bodes well for the Permian’s longer-term outlook.”

Ben Shattuck, director, added: “Concho would be on the short-list of any potential Permian buyer.

“Through a multitude of acquisitions the company has been able to piece together one of the best footprints in the region.

“It holds core assets in both the Midland and Delaware basins with the right balance of production (cashflow) to inventory. While Concho had the odd operational hiccup in the past, there is plenty of runway for ConocoPhillips to put its spin on development.

“Also important is that Concho has been a leader in the Midland community and an early mover, by shale standards, on the ESG front.”

Clarke added: “Potentially overlooked is that ConocoPhillips will now reduce its exploration budget. If buying resource rather than exploring becomes a trend, the momentum for tight oil consolidation stands to increase considerably.”