“Size, scope and scale has become more important,” said Concho Chief Executive Timothy Leach, who will run the combined company’s US production excluding Alaska. “This combination with ConocoPhillips was the best thing for our shareholders.”
The purchase propels ConocoPhillips to the ranks of the top producers in the Permian Basin and makes it the largest US independent oil and gas producer, pumping 1.5 million bpd.
The fifth-largest producer by volume in the Permian, Concho pumps about 319 000 bpd, from wells spread across more than half a million acres. ConocoPhillips is a major producer in two other US shale fields but pumps about 50 000 bpd in the Permian.
ConocoPhillips CEO Ryan Lance said the two executives have a shared vision for building a business that can endure volatile markets. “We’re focused on low-cost supply,” he said, adding Concho has “a low-cost supply that fits.”
The combined company will hold about 23 billion bbl of oil and gas with an average cost of supply of below US$30/bbl of US West Texas Intermediate crude, ConocoPhillips said.
The deal, which faces shareholder votes, is expected to provide US$500 million in annual cost and capital savings by 2022. A closing is expected in the first quarter next year.
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