ConocoPhillips’ agreement to acquire Marathon Oil Corp. is a business boost for two law firms already near the top of their industry in energy transactions.
Wachtell guided ConocoPhillips and Kirkland & Ellis advised Marathon in the $17 billion deal that is among the 10 largest transactions announced so far this year. The agreement advances a trend of energy deals that have served as a bright spot in law firm transactional work that otherwise has dipped since the start of last year.
Law firms, including Kirkland that have opened offices in Texas within the last decade are seeing the bets pay off, said Frédéric Sourgen, professor and chair in energy law at Tulane Law School.
“The teams that have taken the jump have done incredibly well,” Sourgen said in an interview. “Should you have a Houston presence? If you’re serious about energy markets, the answer to me is an unequivocal yes.”
The all-stock ConocoPhillips-Marathon deal, which has an enterprise value of $22.5 billion, represents a 14.7% premium to the last closing share price for Marathon as producers seek new drilling sites on bets that oil and gas demand will remain robust, according to Bloomberg News.
Oil producers “are not investing in more exploration and betting on growth, but they are simply buying reserves that are already firmly established and consolidating their position,” Sourgen said. “We anticipate that oil is going to be a strong stable component of the global energy mix for the foreseeable future.”
Weren’t ‘Looking’
The possibility of a deal “came to our attention here a few weeks ago,” said Ryan Lance, ConocoPhillips’ chief executive officer, according to a transcript of his conference call with analysts on Wednesday. “We weren’t necessarily out looking for something, but it was an opportunity that presented itself.”
Wachtell, Lipton, Rosen & Katz corporate partners Gregory Ostling, Zachary Podolsky and Ahsan Barkatullah led the firm’s team in working on the agreement for ConocoPhillips. Kirkland corporate partners Sean Wheeler, Debbie Yee and Camille Walker advised Marathon.
The announcement of the deal follows a string of transactions in the energy space. Vinson & Elkins earlier this month guided Crescent Energy Inc. on its plan to acquire Houston rival SilverBow Resources Inc. for $2.1 billion. Kirkland and Latham & Watkins this month helped a consortium of buyers in their plan to take Minnesota-based utility company Allete private in a deal worth $6.2 billion.
Wachtell and Kirkland both placed in the top 10 Big Law firms ranked by global energy transactions volume last year, according to Bloomberg data. The two firms compete in the energy transaction space with players including Gibson Dunn & Crutcher and Vinson & Elkins, which have significant practices on the ground in Texas.
Three-fourths of the 21 largest law firms have Houston offices. Twenty years ago, only a third of the 15 largest did. Latham was the first to open its Houston office in 2010 and Kirkland followed in 2014. Willkie Farr & Gallagher also entered the Houston market in 2014, and Gibson, Dunn opened an office there in 2017.
Wachtell, Davis Polk & Wardwell and Paul Weiss Rifkind Wharton & Garrison have been able to snag top deals without formally opening Texas offices.
Lawyer Teams
For Wachtell, Ostling and Podolsky have previously guided ConocoPhillips on large transactions, including its $13 billion acquisition of Concho Resources. Wachtell partners also advised Hess Corp. on its $53 billion sale to Chevron Corp., one of the largest deals in 2023.
For Kirkland, Wheeler, Yee and Walker, who are all Texas-based, have led other energy deals including ONEOK Inc. in its $18.8 billion acquisition of Magellan Midstream Partners LP and Energy Transfer in its $7.1 billion acquisition of Crestwood Equity Partners.
Wachtell lawyers aiding ConocoPhillips in the Marathon agreement also included antitrust partner Nelson Fitts, executive compensation partner Michael J. Schobel, finance partner Emily Johnson and tax partner Deborah Paul, according to the firm.
Other Kirkland lawyers who worked on the deal include debt finance partner Rachael Lichman; capital markets partners Julian Seiguer and Atma Kabad; tax partners David Wheat and Bill Dong; antitrust & competition partners Ian John, Chuck Boyars, Thomas Sebastian Wilson and Athina Van Melkebeke; and executive compensation partners Rob Fowler and Stephanie Jeane.
A Fried Frank team led by partners Roy Tannenbaum and Philip Richter guided Evercore, ConocoPhillips’ financial advisor on the transaction.
The ConocoPhillips-Marathon deal is among the 10 largest transactions announced so far this year, joining BHP Group Ltd.'s purchase of Anglo American for $42 billion, Capital One Financial Corp.'s purchase of Discover Financial Services for $34.4 billion, and two other energy deals—Abu Dhabi National Oil Co.'s purchase of BP PLC for $26 billion and Diamondback Energy Inc.'s purchase of Endeavor Energy Resources for $25.9 billion.
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