ConocoPhillips to buy Marathon Oil at about a 15% premium

Marathon Oil Corp (NYSE: MRO) is up more than 10% in premarket on Wednesday after ConocoPhillips (NYSE: COP) said it will buy the hydrocarbon exploration firm for about $17.1 billion.

Marathon Oil stock valued at a 15% premium

The deal values $MRO at a near 15% premium versus its previous close.

ConocoPhillips expects the acquisition to be immediately accretive to its cash flow, earnings, and shareholder returns. Ryan Lance – its chief executive said in a press release today:

This acquisition of Marathon Oil further deepens our portfolio and fits within our financial framework, adding high-quality, low cost of supply inventory adjacent to our leading U.S. unconventional position.

The news arrives about a month after Marathon Oil reported $1.7 billion in revenue for its first financial quarter that missed Street estimates.

ConocoPhillips-Marathon Oil deal to close in Q4

ConocoPhillips is convinced the merger will add 2 billion barrels and help expand its footprint in shale assets.

The $139 billion giant based out of Houston, Texas expects the deal to complete in the final quarter of this year provided that it secures regulatory approvals and meets other customary closing conditions.

$COP will buyback $7.0 billion worth of its shares in the year after the transaction closes and about $20 billion in the fourth year.  

Heading into Wednesday, Wall Street had a consensus “overweight” rating on Marathon Oil stock that pays a dividend yield of 1.66% at writing.