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ConocoPhillips' (COP) $9.5B Accord to Boost Permian Presence

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ConocoPhillips COP announced an agreement to purchase all Royal Dutch Shell plc’s (RDS.A) assets in the Permian, the most prolific basin in the United States. The cash transaction is valued at $9.5 billion.

The transaction is highly accretive and involves the acquisition of roughly 225,000 net acres in the heart of the core Delaware basin, a sub-basin of the broader Permian. The accord also includes the acquisition of operated crude, gas and water pipelines and infrastructure, spanning approximately 600 miles.

With the deal closure, likely in the fourth quarter of this year, the company will be able to produce 200 thousand barrels of oil equivalent (MBOE/D) daily. Thus, with the transaction, ConocoPhillips — headquartered in Houston, TX — will be among the biggest crude producers in the Permian, with the other leading names being Chevron Corporation CVX and Pioneer Natural Resources Company PXD.

Overall, the agreement reflects ConocoPhillips’ aim of broadening Permian presence. The firm’s strong Permian focus was also reflected on Jan 15, 2021, when the upstream player completed the acquisition of rival shale player Concho Resources Inc. for $13.3 billion including debt.

The upstream energy major will also lead energy transitions by improving its targets for Scope 1 and 2 GHG emissions intensity reduction. The company has set a target for 2030 intensity reduction of 40-50%, thereby marking an improvement from the prior target of 35-45%.

It also announced an increase in the quarterly ordinary dividend. The hiked dividend of 46 cents per share reflected an increase of roughly 7% from the prior dividend of 43 cents. The new dividend is likely to be paid on Dec 1, to stockholders of record as of the close of business on Oct 28.

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Currently, ConocoPhillips carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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Chevron Corporation (CVX) : Free Stock Analysis Report

ConocoPhillips (COP) : Free Stock Analysis Report

Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report

Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report

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