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This Top Oil Stock Is Looking to Ring Up a $1 Billion Sale Following Its Massive Acquisition
COPConocoPhillips(COP) The Motley Fool·2025-04-03 10:13

Core Viewpoint - ConocoPhillips has successfully completed its 22.5billionacquisitionofMarathonOil,enhancingitsU.S.onshorepositionandinternationaloperations,whichisexpectedtosignificantlyincreasefreecashflowandshareholderreturns[1][10].Group1:AcquisitionImpact−TheacquisitionofMarathonOilhasallowedConocoPhillipstoenhanceitsportfoliooflow−costoilandgasresources,enablingthecompanytostreamlineitsoperationsandimproveitsfinancialposition[2][10].−Thedealaddedover2billionbarrelsofresourcestoConocoPhillips′existingU.S.onshoreportfolio,particularlyinthePermian,EagleFord,andBakkenregions,withanaveragesupplycostbelow22.5 billion acquisition of Marathon Oil, enhancing its U.S. onshore position and international operations, which is expected to significantly increase free cash flow and shareholder returns [1][10]. Group 1: Acquisition Impact - The acquisition of Marathon Oil has allowed ConocoPhillips to enhance its portfolio of low-cost oil and gas resources, enabling the company to streamline its operations and improve its financial position [2][10]. - The deal added over 2 billion barrels of resources to ConocoPhillips' existing U.S. onshore portfolio, particularly in the Permian, Eagle Ford, and Bakken regions, with an average supply cost below 30 per barrel [3]. Group 2: Asset Sales - ConocoPhillips is selling its acquired assets in Oklahoma for over 1billion,whichincludes300,000netacresproducingapproximately39,000barrelsofoilequivalentperday,withasignificantportionbeingnaturalgas[4].−Thecompanyaimstodivest1 billion, which includes 300,000 net acres producing approximately 39,000 barrels of oil equivalent per day, with a significant portion being natural gas [4]. - The company aims to divest 2 billion of non-core assets following the Marathon acquisition, having already sold interests in the Ursa and Europa Fields to Shell for 735million[5][6].Group3:FinancialPosition−Followingtheacquisitionandassetsales,ConocoPhillipsisexpectedtostrengthenitsbalancesheet,endinglastyearwith735 million [5][6]. Group 3: Financial Position - Following the acquisition and asset sales, ConocoPhillips is expected to strengthen its balance sheet, ending last year with 6.4 billion in cash and short-term investments, alongside 1.1billioninlong−terminvestments[7].−ThecompanyhasanA−ratedcreditprofile,allowingittoreturnasignificantportionofitsfreecashflowtoinvestors,withplanstoreturn1.1 billion in long-term investments [7]. - The company has an A-rated credit profile, allowing it to return a significant portion of its free cash flow to investors, with plans to return 10 billion this year, an increase from 9.1billionlastyear[8].Group4:FuturePlans−ConocoPhillipsplanstocontinuereturningcashtoinvestors,targetingdividendgrowthwithinthetop259.1 billion last year [8]. Group 4: Future Plans - ConocoPhillips plans to continue returning cash to investors, targeting dividend growth within the top 25% of S&P 500 companies and repurchasing over 20 billion of its stock over the next three years [9]. - The company has significantly upgraded its portfolio and aims to maintain a strong financial profile to ensure robust total returns in the future [10].