Workflow
With Their Needle-Moving Acquisitions Now Closed, These 2 Top Oil Stocks Look Like Great Buys for 2025
COPConocoPhillips(COP) The Motley Fool·2024-12-03 11:10

Core Viewpoint - A consolidation wave in the oil industry has led to significant acquisitions by companies like ConocoPhillips and Devon Energy, positioning them for growth in shareholder value in 2025 and beyond [1][12] ConocoPhillips - ConocoPhillips completed its acquisition of Marathon Oil for 22.5billion,including22.5 billion, including 5.4 billion in debt [2] - The acquisition adds over 2 billion barrels of resources at a cost of supply below 30perbarrel,enhancingConocoPhillips′inventory[3]−Thedealisexpectedtobeimmediatelyaccretivetoearnings,freecashflow,andreturnofcapitalpershare,withanticipatedsynergiesexceeding30 per barrel, enhancing ConocoPhillips' inventory [3] - The deal is expected to be immediately accretive to earnings, free cash flow, and return of capital per share, with anticipated synergies exceeding 1 billion in the next 12 months [4] - ConocoPhillips has increased its dividend by 34% and plans to return more cash to shareholders, with a share-repurchase plan ramping up from 5billionto5 billion to 7 billion annually [5] - The combination of growing earnings and capital returns positions ConocoPhillips for robust total returns in 2025, contingent on stable oil prices [6] Devon Energy - Devon Energy closed its acquisition of Grayson Mill Energy for 5billion,significantlyenhancingitspositionintheWillistonBasin[7][8]−Theacquisitionadds307,000acresand100,000barrelsofoilequivalentperday,makingDevonthethird−largestonshorepureplayproducerintheU.S.[8]−Thedealisexpectedtoboostearningsandfreecashflowpershare,withanticipatedannualcash−flowsavingsof5 billion, significantly enhancing its position in the Williston Basin [7][8] - The acquisition adds 307,000 acres and 100,000 barrels of oil equivalent per day, making Devon the third-largest onshore pure play producer in the U.S. [8] - The deal is expected to boost earnings and free cash flow per share, with anticipated annual cash-flow savings of 50 million and margin improvements of 125millionfrommidstreaminfrastructure[9][10]−Devonhasincreaseditsshare−repurchaseauthorizationby67125 million from midstream infrastructure [9][10] - Devon has increased its share-repurchase authorization by 67% to 5 billion and plans to reduce debt by $2.5 billion over the next two years [10] - The growth and increased cash returns position Devon for strong total returns in 2025 if oil prices remain stable [11]