Concho Resources

History

2020: ConocoPhillips purchased Concho Resources for $9.7 billion

In the middle of October, 2020 ConocoPhillips purchased the American producer of slate Concho Resources oil for $9.7 billion. It is reported that all amount will be paid by actions.

The transaction reflects the difficult situation which developed in the American slate industry in general. The companies incur serious losses because of sharp drop in oil prices. The cost of extraction of slate oil in the USA is quite high and profitable only at rather high prices therefore several companies already went bankrupt, and others try to lower costs using consolidation with more large-scale concerns.

ConocoPhillips of a probrel of Concho Resources for $9.7 billion

Shareholders of Concho will receive 1.46 stocks of ConocoPhillips for each action, and the award in comparison with Concho share value at biddings will make only 1.5%. It is known what thanks to this transaction of ConocoPhillips will be among leading manufacturers in the Perm basin, the main oil field of the USA which stretches from the Western Texas to the southeast of New Mexico. Thanks to purchase of ConocoPhillips will also become the largest independent petrogas company in the USA with oil production of 1.5 million barrels a day.

To the conclusion of the transaction of Concho extracted about 320 thousand barrels a day from the wells located on the area more than half a million acres and was the fifth in value company, working in the region of the Perm basin. Concho loss in the second quarter made $435 million against $97 million during the same period of last year, stocks of the company since the beginning of year decreased almost twice. At the same time the company saved the attractiveness for buyers thanks to high production volume, the extensive area of developments for oil production and rather low debt. As stated in the statement for merge, the transaction will allow to save $500 million a year by 2022.^[1]

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