Marathon Petroleum Corp., the firm that was once part of Marathon Oil before the two companies were created separately wrapped up its $23.3 billion purchase this week of its Texas-based rival Andeavor.
It makes Marathon, the largest U.S. oil refiner by capacity. Shareholders of both companies agreed to the purchase.
The other Marathon, Marathon Oil continues with a large presence in Oklahoma’s STACK and SCOOP plays and has a regional office in Oklahoma City.
Andeavor was based in San Antonio and ended its trading on the New York Stock Exchange. Now that it’s a wholly-owned subsidiary of Marathon, the company is trading under the ticker symbol ANDX according to a report in The Toledo Blade.
“This transformative transaction is a significant milestone in our company’s more than 130-year history,” Marathon Chairman and CEO Gary Heminger said in a statement. Marathon “is now the leading refining, midstream, and marketing company in the U.S., and is well-positioned for long-term growth and shareholder value creation.”
Marathon, which had been the nation’s second-largest refiner of crude oil with six refineries processing 1.9 million barrels of crude per day, acquired Andeavor’s 10 refineries spread across the western United States.
The combined 16 refineries give Marathon a refining potential of 3 million barrels per day. But Marathon also obtains 3,200 convenience stores and 13,000 employees in the West operating under the Arco brand plus seven other brands. Marathon already has 2,740 Speedway convenience stores.
At the start of the year, Marathon’s Oklahoma production averaged 75,000 net Boed which was a 17 percent increase from the fourth quarter of 2017. Marathon also brought 17 gross company operated wells to sales in the first quarter of 2018. It was a move the company said completed the STACK leasehold program for the year and allowed for the transition to pad drilling for the rest of the year.
The completion of the deal gives Andeavor stockholders either 1.87 shares of Marathon stock or $152.27 in cash for each Andeavor share. Marathon said based on current figures, the company will pay out about $3.5 billion in cash, and issue 240 million shares of Marathon common stock.
As a result, Marathon shareholders earlier agreed to expand the total number of shares the company can issue to two billion from one billion. The company has 451 million shares outstanding.
Marathon said in a Securities and Exchange Commission filing that it is assuming Andeavor’s $3.375 billion in debt because of the acquisition. The oil refiner added that it has entered into a $6 billion credit agreement, replacing a former $2.5 billion agreement.
As of Monday, former Andeavor Chairman and CEO Greg Goff has become executive vice chairman of Marathon with an annual base salary of $1.6 million and an annual bonus of $2.56 million if performance goals are met. He also could receive stock awards valued at $12.2 million under a long-term incentive plan.
Marathon has expanded its corporate board to 12 directors from a previous 10 and will give Mr. Goff and former Andeavor general counsel Kim Rucker board seats.