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Acquisitions and Dispositions | 3 Months Ended
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Mar. 31, 2025
Business Combination, Asset Acquisition And Dispositions [Abstract] |
Acquisitions and Dispositions | Note 3—Acquisitions and Dispositions Acquisition of Marathon Oil Corporation (Marathon Oil) In November 2024, we completed our acquisition of Marathon Oil, an independent oil and gas exploration and production company with operations across the Lower 48 and in Equatorial Guinea. At close, the transaction was valued at $16.5 billion, which primarily represented 0.255 shares of ConocoPhillips common stock exchanged for each outstanding share of Marathon Oil common stock.
Total Fair Value | Millions of Dollars
Value of ConocoPhillips common stock issued* | $ | 15,972 |
Cash transferred at close** | 451 |
Value attributable to Marathon Oil share-based awards | 67 |
Other liabilities incurred*** | 17 |
Total Fair Value (Millions) | $ | 16,507 |
*Represents the fair value of approximately 143 million shares of ConocoPhillips common stock issued to Marathon Oil stockholders. The fair value is based on the number of eligible shares of Marathon Oil common stock at a 0.255 exchange ratio and ConocoPhillips' average stock price on November 22, 2024, which was $111.93. **Cash transferred at close primarily represents funds contributed to Marathon Oil for repayment of Marathon Oil's estimated commercial paper liabilities as of the closing date. ***Liabilities incurred are related to cash settled share-based awards and payment of cash in lieu of fractional Marathon Oil shares outstanding. The transaction was accounted for as a business combination under FASB Topic ASC 805 using the acquisition method, which requires assets acquired and liabilities assumed to be measured at their acquisition date fair values. Fair value measurements were made for acquired assets and liabilities. Adjustments to those measurements may be made in subsequent periods, up to one year from the acquisition date, as we identify new information about facts and circumstances that existed as of the acquisition date to consider. At March 31, 2025, remaining items to finalize include allocation of fair value to unproved properties. The impact of finalizing the fair value allocation is not expected to have a material impact to our consolidated financial statements. Oil and gas properties were valued using a discounted cash flow approach incorporating market participant and internally generated price assumptions; production profiles; and operating and development cost assumptions. Debt assumed in the acquisition was valued based on observable market prices. The fair values of accounts receivable, accounts payable, and most other current assets and current liabilities were determined to be equivalent to the carrying value due to their short-term nature. The acquisition, valued at $16.5 billion, was allocated to the identifiable assets and liabilities based on their estimated fair values as of the acquisition date of November 22, 2024.
Assets Acquired | Millions of Dollars
Cash and cash equivalents | $ | 385 |
Accounts receivable, net | 969 |
Inventories | 360 |
Investments and long-term receivables | 550 |
Net properties, plants and equipment | 24,178 |
Other assets | 201 |
Total assets acquired | $ | 26,643 |
Liabilities Assumed |
Accounts payable | $ | 1,180 |
Accrued income and other taxes | 200 |
Employee benefit obligations | 187 |
Long-term debt | 4,719 |
Asset retirement obligations | 781 |
Deferred income taxes | 2,486 |
Other liabilities | 583 |
Total liabilities assumed | $ | 10,136 |
Net assets acquired | $ | 16,507 |
With the completion of the transaction, we acquired proved properties of approximately $13 billion, with $12 billion in Lower 48 and $1 billion in Equatorial Guinea, and unproved properties of $11 billion in Lower 48. We recognized approximately $568 million pre-tax of transaction-related costs to date, inclusive of $23 million in the first quarter of 2025. These non-recurring costs related primarily to employee severance and related benefits, fees paid to advisors and the settlement of share-based awards for certain Marathon Oil employees based on the terms of the Merger Agreement. Supplemental Pro Forma (unaudited) The following table summarizes the unaudited supplemental pro forma financial information for the three-month period ended March 31, 2024, as if we had completed the acquisition on January 1, 2023.
| Millions of Dollars
| Three Months Ended March 31, 2024 |  |
| As reported | Pro Forma Marathon Oil | Pro Forma Combined |  |  |  |
Supplemental Pro Forma (unaudited) |  |  |  |  |  |  |
Total Revenues and Other Income | $ | 14,476 |  | 1,551 |  | 16,027 |  |  |  |  |
Net Income (Loss) | 2,551 |  | 344 |  | 2,895 |  |  |  |  |
Earnings per share: |  |  |  |  |  |  |
Basic net income (loss) | $ | 2.16 |  |  | 2.18 |  |  |  |  |
Diluted net income (loss) | 2.15 |  |  | 2.18 |  |  |  |  |
The unaudited supplemental pro forma financial information is presented for illustration purposes only and is not necessarily indicative of the operating results that would have occurred had the transaction been completed on January 1, 2023, nor is it necessarily indicative of future operating results of the combined entity. The pro forma results do not include cost savings anticipated as a result of the transaction. The pro forma results include adjustments which relate primarily to DD&A, which is based on the unit-of-production method, resulting from the purchase price allocated to oil and gas properties as well as adjustments for tax impacts. We believe the estimates and assumptions are reasonable, and the relative effects of the transaction are properly reflected. Assets Sold In the first quarter of 2025, we sold our interests in certain noncore assets in the Lower 48 segment for net proceeds of $581 million and recognized a $64 million before-tax and $49 million after-tax gain. At the time of disposition, our interest in these assets had a net carrying value of $517 million, comprised primarily of $553 million of PP&E and $36 million of liabilities, primarily related to noncurrent AROs. Assets Held for Sale In February 2025, we entered into an agreement to sell our interests in the Ursa and Europa Fields, and Ursa Oil Pipeline Company LLC to Shell Offshore Inc. and Shell Pipeline Company LP, respectively, for $735 million subject to customary closing adjustments. These assets, in our Lower 48 segment, have a net carrying value of approximately $394 million, comprised primarily of $496 million of PP&E and $102 million of liabilities, primarily related to noncurrent AROs. These assets met held for sale criteria in the first quarter of 2025, and as of March 31, 2025, we reclassified the PP&E to "Prepaid expenses and other current assets" and the noncurrent liabilities to "Other accruals" on our consolidated balance sheet. This transaction closed in May 2025. For tax-related impacts of this disposition, see Note 19. Contingent Payments In October 2023, we completed our acquisition of the remaining 50 percent working interest in Surmont, an asset in our Canada segment, from TotalEnergies EP Canada Ltd. The consideration for the acquisition contained a contingent consideration arrangement that requires additional consideration to be paid to TotalEnergies EP Canada Ltd. up to $0.4 billion CAD over a five-year term. The contingent payments represent $2 million for every dollar that WCS pricing exceeds $52 per barrel during the month, subject to certain production targets being achieved. The undiscounted amount we could pay under this arrangement was up to $0.3 billion USD at closing. The fair value of the contingent consideration on the acquisition date was $320 million and estimated by applying the income approach. Since the acquisition, we have made payments of $197 million USD under this arrangement, included in the "Other" line within the Financing Activities section of our Consolidated Statement of Cash Flows. See Note 11.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent + Details
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