ConocoPhillips explores sale of Permian shale assets worth over $1 billion, sources say

Marathon Oil

30/10/2024 18:55

By Shariq Khan and David French
       Oct 30 (Reuters) - ConocoPhillips  COP.N  is exploring a
sale of some of its shale operations in the Permian Basin worth
more than $1 billion, two years after an unsuccessful attempt to
find a buyer for the same assets, people familiar with the
matter said on Wednesday.
    The Houston, Texas-based oil and gas producer is looking to
shed some non-core assets as it prepares to close its $22.5
billion takeover of Marathon Oil  MRO.N  by year end. It is set
to assume about $5.4 billion of Marathon's debt as part of the
deal, and has outlined plans to raise $2 billion through asset
sales. 
    ConocoPhillips has tapped investment bankers at RBC Capital
Markets  RY.TO  to run a sale process for the Permian assets and
in recent weeks invited bids from potential buyers, which
include smaller public and private oil producers, the sources
said, requesting anonymity as the discussions are confidential. 
    In 2022, ConocoPhillips had attempted to offload these
Permian operations but could not agree on a deal with potential
suitors, the sources said. 
    Production from the assets, which span 55,000 net acres in
the Delaware portion of the Permian Basin, is estimated to touch
about 17,000 barrels of oil equivalent per day by the end of the
year, with core earnings for 2025 estimated to be more than $220
million, the sources said. They cautioned that a deal is not
guaranteed. 
    ConocoPhillips declined to comment. RBC did not respond to
requests for comment. 
    The U.S. shale industry has witnessed a record-breaking wave
of dealmaking over the past two years, as energy companies have
rushed to expand oil and gas drilling inventories, especially in
the Permian Basin. Notable deals that have been agreed include
Exxon Mobil's  XOM.N  $60 billion acquisition of Pioneer Natural
Resources and Chevron's proposed $53 billion takeover of oil
producer Hess  HES.N . 
    The biggest acquirers are now looking to divest non-core
units in the wake of these takeovers, to streamline operations,
pay down debt, and boost shareholder returns.
    Such assets are likely to attract smaller producers that are
turning to dealmaking to gain scale and compete better against
larger rivals.

 (Reporting by Shariq Khan and David French in New York; Editing
by David Gregorio)
 ((davidj.french@thomsonreuters.com;))