Energy Analytics

ConocoPhillips acquires Concho Resources for $13.3 billion in the largest pure shale deal since 2011


ConocoPhillips is acquiring Permian heavyweight Concho Resources in an all-stock deal for $49.30 per share (total equity value of $9.7 billion) and a total enterprise value of $13.3 billion. The acquisition adds 550,000 net acres in the Permian (350,000 Delaware acres and 200,000 Midland acres) plus 200,000 bbl/d oil output and 719 MMcf/d gas production for 2Q20 to Conoco’s portfolio, increasing Permian output six-fold. Only 20% of Concho’s leasehold is located on federal land.

“Concho Resources is one of the premier acquisition targets among U.S. shale drillers and Conoco is on a very short list of potential buyers, so this deal looks to be a natural fit on both sides,” said Enverus M&A analyst Andrew Dittmar. The $13.3 billion acquisition is the largest upstream deal entirely focused on shale since BHP bought Petrohawk for $15.1 billion in 2011.

Top Ten U.S. Upstream Deals Since 2010

Top Ten U.S. Upstream Deals Since 2010

“Buying Concho strategically fills a gap in Conoco’s portfolio. While well positioned in multiple U.S. plays like the Eagle Ford and Bakken plus internationally, Conoco lagged rivals in the Permian,” added Dittmar. “Conoco’s patience waiting for the right deal appears well rewarded as the company is picking up one of the premier positions in the Permian at ~$10,000/acre or a fraction of the cost of other large deals in the basin over the last few years.”

An important factor when evaluating potential merger targets in the current market are debt loads. Acquirers don’t want to stress their own balance sheets by taking on targets with excess debt. Again, Concho registers well in this category with debt comprising less than 30% of total transaction enterprise value.

Like the other corporate consolidation deals in 2020, the consideration to Concho shareholders is entirely stock. One difference is that this deal does include a moderate premium of 15% to Concho’s share price before rumors of a deal began to swirl on October 13th. That is in contrast to 2020’s other corporate deals, which have been for essentially no premium. Concho was trading at enough of a discount to its intrinsic value that Conoco is able to pay this premium and still see the deal as accretive to its shareholders.

The deal looks beneficial to Concho owners, giving them a piece of a more diversified asset base that includes significant Alaska and international exposure in addition to shale. The addition of conventional assets lessens the base decline rate and makes it more straight forward to return capital to shareholders. Conoco’s pre-deal stock price and payout implies a dividend yield of around 5%. The combined company will target returning 30% of cash from operations to shareholders through ordinary dividends and additional distributions.

With over $30 billion in announced E&P mergers now on the books in 2020 including two deals over $10 billion, shale consolidation is well underway. Even the total dollar amount transacted understates the scale of consolidation going on in the industry given still depressed equity prices relative to past years. Over 1.0 Mboe/d of production and 1.6 million net acres have changed hands in four corporate deals year-to-date.

“Even after 2020’s merger activity, there is still room left for the industry to consolidate,” commented Dittmar. “The limiting factor will be the number of attractive merger partners available, both on the seller and acquirer side.”

The relative scarcity of attractive deals may place additional pressure on some companies to get a transaction in place and lead to more activity in the near term. Some of the other well-positioned independents in the Permian with reasonable debt loads are likely the best prospects for a deal.



Energy’s most trusted SaaS platform — creating intelligent connections that uncover insights and opportunities to deliver extraordinary outcomes.

Subscribe to the Enverus Blog

A weekly update on the latest “no-fluff” insight and analysis of the energy industry.

Related Content

Enverus Blog - Coterra’s big Permian projects defy degradation worries
Intelligence Oilfield Services
ByJoseph Gyure, Editor, Enverus Intelligence

In the biggest oilfield services transaction since 2016, SLB agreed to acquire ChampionX Corp. for $7.76 billion in stock, bringing an industry leader in production chemicals into the OFS giant’s fold. ChampionX’s $420 million in net debt brings the transaction...

Geoscience Analytics
ByDai Jones

Offshore drilling is a complex and multifaceted process essential for accessing oil and gas reserves beneath the seabed. Exploration drilling is the initial phase, crucial for identifying potential oil or gas reservoirs. It involves the deployment of mobile drilling units...

ByBryn Davies

Did you know that Enverus now has 18 offices around the world, with the most recent addition of the Brno office in Czechia

available transfer capacity
Energy Transition
ByRiley Prescott

Renewable integration has experienced a remarkable surge in Texas, with the installation of more than 9 GW of renewable capacity in 2023 alone.

ByPhillip Dunning

Are you considering buying mineral rights in Texas? Before you take the next steps, familiarize yourself with the comprehensive information we've presented in this blog post.

Analyst Takes Generative AI

The energy sector is definitely drawn to the potential of artificial intelligence (AI). The promise of making things work better and more efficiently is too tempting to ignore.

Enverus News Release - Utility growth prospects: Quantifying long and short opportunities
Analyst Takes Power and Renewables
ByRob Allerman

For much of March, the California Independent System Operator (CAISO) experienced significant fluctuations in power prices due to congestion, transmission outages and bearish pricing trends in SP-15. My team used Panorama to better understand and the Power Market Publications in...

Energy Transition
ByCarson Kearl

One of the most common and important questions for the power sector today is what impact artificial intelligence and the data centers needed to generate it will have on energy consumption.


Midstream is caught between a rock and a hard place. On one hand, gathering and pipeline operators, processors, storage and energy marketers face abundant opportunities and challenges when meeting customer demand.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Sign up for our Blog

Register Today

Sign Up

Power Your Insights

Connect with an Expert

Access Product Tour

Speak to an Expert