Marathon Oil Corporation ( MRO ) and ConocoPhillips ( COP ) stocks are moving in opposite directions on Wednesday after they disclosed a definitive deal in which ConocoPhillips ( COP ) will acquire Marathon Oil ( MRO ) in an all-stock transaction with an enterprise value of $22.5 billion.

As per the agreement, Marathon Oil ( MRO ) shareholders will receive 0.2550 ConocoPhillips ( COP ) shares for each share of Marathon Oil ( MRO ) they hold.

The acquisition price represents a 14.7% premium to the closing share price of Marathon Oil ( MRO ) on May 28, 2024, and a 16.0% premium to the prior 10-day volume-weighted average price.

The acquisition deal is projected to close in the fourth quarter of 2024, subject to the approval of Marathon Oil ( MRO ) stockholders and other customary closing conditions.

Synergies: This acquisition is anticipated to add over 2 billion barrels of resource with an estimated average point forward cost of supply of less than $30 per barrel WTI to ConocoPhillips’ existing U.S. onshore portfolio.

The buyout is expected to be immediately accretive to ConocoPhillips ( COP ) on earnings, cash from operations, free cash flow, and return of capital per share to shareholders.

Also, ConocoPhillips ( COP ) expects to achieve the full $500 million worth of cost and capital synergy run rate within the first full year following deal closure.

Dividend & Share Buyback Boost: ConocoPhillips ( COP ) disclosed that it expects to increase its ordinary base dividend per share by 34% to $0.78 starting in the fourth quarter of 2024.

Post-deal closure and assuming recent commodity prices, ConocoPhillips ( COP ) targets repurchasing over $7 billion in shares in the first full year (up from over $5 billion standalone) and over $20 billion in shares in the first three years.

Ryan Lance, ConocoPhillips ( COP ) chairman and chief executive officer, said, “This acquisition of Marathon Oil ( MRO ) 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,”

“We remain committed to our differentiated cash from operations distribution framework of returning greater than 30% to our shareholders, with a track record of returning over 40% since our 2016 strategy reset,”

ConocoPhillips ( COP ) ended the quarter with $6.3 billion in cash and short-term investments and $1.1 billion in long-term investments.

Investors can gain exposure to COP via IShares U.S. Oil & Gas Exploration & Production ETF ( IEO ) and Westwood Salient Enhanced Energy Income ETF ( WEEI ) .

Investors can gain exposure to MRO via Invesco S&P 500 Equal Weight Energy ETF and First Trust Energy AlphaDEX Fund ( FXN ) .

Price Action: COP shares are down 2.80% at $115.63, while MRO shares are up 8.32% at $28.65 premarket at the last check on Wednesday.