M&A News: Marathon Oil Rises on Potential Deal with ConocoPhillips

The broader trend of consolidation in the energy sector continues. Shares of oil and natural gas producer Marathon Oil (NYSE:MRO) are up by nearly 5% today on chatter of a potential deal with ConocoPhillips (NYSE:COP).

The Deal Talks

According to the Financial Times, talks between the two companies are in advanced stages for a potential acquisition of MRO by COP in a deal valued upwards of $15 billion. While a final deal appears certain, the possibility of a new bidder emerging still exists.

Conoco is the largest independent energy producer globally. Earlier, market chatter indicated Devon Energy (NYSE:DVN) as a potential suitor for MRO. Last year, Devon and Marathon were said to be in initial discussions for a possible combination. Back in 2020, COP had snapped up Concho Resources for $10 billion.

Part of the Industry’s Consolidation Wave

This industry focus on consolidation comes amid buoyant U.S. energy production, supply curbs from OPEC, and pressured oil prices. In recent times, Diamondback Energy (NASDAQ:FANG) acquired Endeavor Energy for $26 billion, Chevron (NYSE:CVX) acquired Hess (NYSE:HES) in a $53 billion deal, and Exxon (NYSE:XOM) snapped up Pioneer Natural for $60 billion.

Other major deals include Occidental’s (NYSE:OXY) $12 billion acquisition of CrownRock and Chesapeake Energy’s (NASDAQ:CHK) $7.4 billion combination with Southwestern Energy (NYSE:SWN). Importantly, a focus on scale, profitability, and preparing for any eventual industry downturns suggests this wave of consolidation could continue.

Which Energy Stock Is the Best to Buy?

While nearly all of these names have ticked higher over the past three months, the TipRanks Stock Comparison tool indicates the highest potential upside of 24.2% in COP stock among the names on our list today. Overall, the Street has a Strong Buy consensus rating on the stock, with an average COP price target of $147.75.

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