24/7 Wall St. Insights

• In April, we wrote that Marathon Oil could be acquired.
• ConocoPhillips is a surprise buyer in the large-cap energy sweepstakes.
• Access 2 legendary, high-yield dividend stocks Wall Street loves.

With the ink barely dry on one major energy deal and another huge one in the works, we were already speculating about the possibility of more to come in April. And true to our expectations, just over a month later, our predictions were confirmed by announcing yet another massive deal.

ConocoPhillips (NYSE: COP) has announced it will acquire Marathon Oil Corp. (NYSE: MRO) in an all-stock transaction with an enterprise value of $22.5 billion, including $5.4 billion of the company’s net debt. Under the reported terms of the deal, Marathon Oil shareholders will receive 0.2550 shares of ConocoPhillips common stock for each share of Marathon Oil common stock, representing a 14.7% premium to the closing share price of Marathon Oil on May 28, 2024, and a 16.0% premium to the prior 10-day volume-weighted average price.

Exxon Mobil Corp. (NYSE: XOM) has completed the firm’s massive $59.5 billion all-stock acquisition of Pioneer Natural Resources, and the company noted in a press release that the deal will:

• Transforms Exxon’s upstream portfolio by more than doubling the company’s Permian footprint
• Combines Pioneer’s sizeable acreage, entrepreneurial culture, and deep industry expertise with Exxon’s balance-sheet strength, advanced technologies, and industry-leading project development capabilities
• Transitions Pioneer’s 2050 net-zero Permian goal to a 2035 plan

Meanwhile, mega-cap rival Chevron Corp. (NYSE: CVX) announced last fall that it has entered into a definitive agreement with Hess Corp. (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion.

Three lawsuits have been filed against Hess, charging inadequate disclosure over the sale, and Chevron has said arbitration over Hess’s Guyana assets could delay the closing timeline until October 2025. However, most Wall Street analysts feel the deal ultimately will get done, and Chevron will emerge even more powerful in the energy sector.

We screened our 24/7 Wall St. energy research database and as we previously reported, four top companies could be next as oil majors look to consolidate the industry and grow their oil, gas, and LNG footprint. All pay dependable dividends, and all are rated as Buy at top Wall Street firms.

APA

This company was long considered an industry leader when they were known as Apache and is offering one of the best entry points in the sector while paying a 3.35% dividend. APA Corp. (NYSE: APA) explores for and produces oil and gas properties through its subsidiaries.

It has operations in the United States, Egypt, and the United Kingdom, as well as exploration activities offshore Suriname. It also operates gathering, processing, and transmission assets in West Texas and owns four Permian-to-Gulf Coast pipelines.

The company is one of the largest US E&P companies, with 2.3 BBOE of proven reserves (63% liquids). It is an acquirer/exploiter/explorer, a fiscally conservative company that has consistently grown its reserves and production via acquisitions and organic projects.

APA also operates gathering, compression, processing, and transmission assets in West Texas and owns four long-haul pipelines in the Permian Basin.

Coterra Energy

This company was formed by closing the $17 billion merger of Cabot Oil & Gas and Cimarex Energy in 2021 and pays a solid 3.05% dividend. Coterra Energy Inc. (NASDAQ: CTRA) is an independent oil and gas company engaged in the development, exploration, and production of oil, natural gas, and natural gas liquids in the United States.

It primarily focuses on the Marcellus Shale, which has approximately 177,000 net acres in the dry gas window of the play and is located in Susquehanna County, Pennsylvania.

The company also holds approximately 306,000 net acres of Permian Basin properties and approximately 182,000 net acres of Anadarko Basin properties in Oklahoma.

In addition, it operates natural gas and saltwater disposal gathering systems in Texas.

The company sells its natural gas to:

• Industrial customers
• Local distribution companies
• Oil and gas marketers
• Major energy companies
• Pipeline companies
• Power generation facilities

Devon Energy

This energy company may offer one of the best value propositions in the sector as it utilizes the variable dividend strategy and currently pays a 4.19% dividend. Devon Energy Corp. (NYSE: DVN) is an independent energy company that primarily explores, develops, and produces oil, natural gas, and natural gas liquids (NGLs) in the United States and Canada. It operates approximately 19,000 wells.

The company also offers midstream energy services through:

• Natural gas pipelines
• Plants and treatment facilities
• Gathering, transmission, processing, fractionation, and marketing to natural gas producers
• NGLs
• Crude oil
• Condensate producers

Production is primarily crude oil-focused, while growth opportunities are focused on liquids. The Delaware Basin, SCOOP/STACK, Eagle Ford Shale, Canadian Oil Sands, and the Barnett anchor the company.

Devon also owns equity in the publicly traded midstream MLP EnLink Midstream LLC (NYSE: ENLC).

Raymond James Has 5 Passive Income Dividend Stocks to Buy With Yields Up to 14%

Diamondback Energy

This red-hot energy play looks poised to press higher again and offers a rich 4.68% dividend. Diamondback Energy Inc. (NASDAQ: FANG) is an independent oil and natural gas company focused on the acquisition, development, exploration, and exploitation of unconventional and onshore oil and natural gas reserves in the Permian Basin in West Texas.

Diamondback Energy is focused on developing:

• The Spraberry and Wolfcamp formations of the Midland Basin
• The Wolfcamp and Bone Spring formations of the Delaware Basin, which are part of the Permian Basin in West Texas and New Mexico

The company also owns, operates, develops, and acquires midstream infrastructure assets, including 770 miles of crude oil gathering pipelines, natural gas gathering pipelines, and an integrated water system in the Midland and Delaware Basins of the Permian Basin.

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