By Dave Sebastian

ConocoPhillips is buying Concho Resources Inc. in an all-stock transaction valued at $9.7 billion, at a time when the American shale-drilling industry is facing a downturn after a historic crash in oil prices amid the Covid-19 pandemic.

ConocoPhillips said the transaction would improve its competitive position in the Midland basin.

The companies said each share of Concho Resources will be exchanged for 1.46 shares of ConocoPhillips stock, reflecting a 15% premium over closing share prices on Oct. 13, when Bloomberg News reported on the impending deal.

The acquisition combines a resource base of about 23 billion barrels of oil equivalent with less than $40 a barrel West Texas Intermediate cost of supply and an average cost of supply below $30 a barrel WTI, the companies said.

The companies said they would have $500 million in annual cost and capital savings by 2022. The transaction is expected to close in the first quarter of 2021.

Concho Chairman and Chief Executive Tim Leach will join ConocoPhillips' board and leadership team.

Shares of Concho, which closed at $48.60 Friday, rose 11.1% in premarket trading. Shares of ConocoPhillips, which closed at $33.77 Friday, rose 0.5% in premarket trading.

Write to Dave Sebastian at dave.sebastian@wsj.com

(END) Dow Jones Newswires

October 19, 2020 07:43 ET (11:43 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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