Conoco interested in Concho: Bloomberg

Concho Resources closed 10.2 per cent higher yesterday with a market capitalisation of USD 9.57 billion after Bloomberg reported ConocoPhillips is attracted to the Texan hydrocarbon explorer.

People with knowledge of the situation told the news provider the two are in talks over a deal that could be announced within the next couple of weeks.

A note by JPMorgan, cited by the news provider, indicated a deal between the two would make “strategic and financial sense” and would provide “critical mass” to Conoco’s footprint in the Permian Basin.

However, the sources cautioned there is no guarantee the discussions would lead to an agreement and a final decision has not yet been made.

Representatives for both companies did not immediately respond to requests for comment when contacted by Bloomberg.

ConocoPhillips has made no bones about the fact it is on the lookout for deals.

In the earnings call for the results of the quarter ended 30th June 2020, chairman and chief executive Ryan Lance said: “We’re watching the market every day.

“We’re looking at both asset deals. We’re looking at corporate deals. We’re looking across the board.”

Lance added it is encouraging seeing the kind of premium Chevron is paying for Noble, especially as “large premiums of the past couple of years just don’t work in this business going forward”.

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In July, the Californian multinational energy corporation, which is one of the successor companies of Standard Oil, agreed to pay USD 13.00 billion to acquire the Texan hydrocarbon explorer.

Zephyr, the M&A database published by Bureau van Dijk, shows 733 deals targeting companies involved in oil and gas extraction, the drilling of oil and gas wells and providing other support activities for hydrocarbon operations have been announced globally so far this year.

Of the 113 acquisitions signed off in 2020 to date, some of the largest feature Chevron buying Noble and Devon Energy taking over WPX Energy for USD 2.55 billion.

© Zephus Ltd

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