ConocoPhillips agreed to a $17.1 billion deal to buy Marathon Oil Corp. on May 29, but it certainly isn’t the only target Conoco had zeroed in on during the past several months.

Deal master Stephen Trauber, chairman and global head of energy and clean technology at Moelis & Co., was with “some Conoco guys” a couple of days before Diamondback Energy’s February announcement that it would acquire Endeavor Energy for $26 billion.

ConocoPhillips had hoped to grab Endeavor while Exxon Mobil and other large companies were preoccupied with their own deals. They were nonplussed to see their prize plucked away by Diamondback.

Likewise, Trauber said ConocoPhillips had joined the hunt for CrownRock LP, but Occidental Petroleum ultimately stepped in to buy it for $12 billion. 

Another company was also looking: Devon Energy.

Trauber said ConocoPhillips wasn’t feeling pressure to do a deal—mostly.

“They remain one of the largest independent upstream companies in the world, so they didn't need to do this deal,” Trauber told Hart Energy on May 30. “On the other hand, this deal created real value for the company, and they did lose out on a couple of other deals that made great strategic sense. And this one remained there.”

Even as ConocoPhillips is poised to add assets in the Permian Basin, Eagle Ford Shale and Bakken Shale, another suitable suitor has a strikingly similar asset base—Devon.

Devon’s hard look

Devon had also recognized that the companies being acquired by Diamondback, Occidental and ConocoPhillips would pair nicely with their assets.

“Look, it's no secret that Devon also looked hard at CrownRock and Endeavor,” Trauber said.

Now, Devon stands as one of the few large public companies yet to do a deal in the current phase of consolidation.

The other, EOG Resources, has historically less frequently pulled the trigger on large-scale transactions.

Devon, however, is different, Trauber said.

“It’s a part of Devon’s DNA to be acquisitive,” he said.

Similar to ConocoPhillips, Devon’s assets match up with Marathon’s in the Bakken, Permian and Eagle Ford.

Could Devon play spoiler in the ConocoPhillips-Marathon deal, just as Occidental played spoiler to Chevron’s attempts to buy Anadarko Petroleum Corp. in 2019? Occidental eventually won out, paying $38 billion for Anadarko and assuming another $46 billion in debt.

Trauber is doubtful.

“In this case, you're talking about a very large, very well-capitalized company in Conoco with a strong strategic fit, strong synergies [with Marathon],” he said. “So I just don't see going after this company as necessarily a winning hand right now given [that] Conoco is intent on getting it done. It's always hard to intercede on somebody else's deal, anyway.”

ConocoPhillips is also likely to achieve at least $500 million in cost savings, though Trauber guesses synergies will be higher than that figure.

For one, Marathon and ConocoPhillips have offices in close proximity and “you don’t need both offices,” he said. “So there’s going to be substantial layoffs and huge synergies.”

But that’s the point of consolidation.

“What we're seeing now happens in all mature industries, is you start to see consolidation,” he said. “We can gain efficiencies and cost savings and utilize the lower cost of capital and generate better returns.”

Public attractions

Last year, Devon CEO Rick Muncrief said that the company’s participation in M&A would have to clear a “high bar,” and the approach to a deal would be disciplined and thoughtful—something “we can sell that to shareholders—that it’s the right thing to do.”

Notably, Devon had reportedly made inroads with the Bakken’s Enerplus Corp. Chord Energy ultimately made a $4 billion offer for Enerplus, with the transaction set to close May 31.

Devon, EOG and other potential buyers still have some opportunities elsewhere, although they are dwindling, particularly in the Permian.

Two that jump to the top of the page: Permian Resources and Matador Resources.

However, neither company is necessarily an easy pick up.

Matador’s executives have made the case that the company is doing just fine on its own and should continue to build “brick by brick rather than doing a big transaction,” Trauber said. The $7.7 billion market cap company would be a natural fit with Devon’s acreage in New Mexico’s Delaware Basin.

“They have a very unique and strong culture and they would like to remain independent subject to somebody coming in with a very strong offer,” he said. “But their strong desire is to remain independent.”

Permian Resources finds itself in a different position, with financial sponsors that own sizable pieces of that company. The company’s top shareholders include an entanglement of private equity funds: Blackrock, Vanguard Group, Riverstone Holdings and EnCap.

Private attractions

On the private side, Franklin Mountain would likely command somewhere in the “$3 billionish range,” Trauber said. The company could fit in with EOG, Devon, Permian Resources or Matador.

But for the larger companies, such a transaction would be a tuck-in not on the scale of the $20 billion deals seen in the Permian and other basins.

“It's not going to move the needle in a big way, like a sizable deal with significant synergies and great strategic overlap would have,” Trauber said.

A considerably more lucrative private E&P may be Fort Worth, Texas-based Double Eagle, which has amassed at least 40,000 net acres. The company’s Permian oil production averaged about 38,700 bbl/d in January, according to the Texas Railroad Commission.

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Again, Trauber sees Double Eagle in an enviable position.

“I’m very, very knowledgeable of that situation. ….Look, they’ve got a data room open. Anybody can make a bid anytime. I am sure that Devon will take a look at that, and I'm sure that others will take a look at that, including everybody who has just bought into the Midland.”

But, if a seller is in Double Eagle’s shoes, “why would you want to try to do a deal right now” with Exxon just coming off a massive deal to acquire Pioneer Natural Resources, he said. ConocoPhillips is also tied up with a deal, along with Chevron, Occidental and Diamondback.

Double Eagle can wait

Each company is, potentially, a sensible strategic buyer of Double Eagle’s assets.

“And so why would you want to sell now until those guys become free and [are] able to compete against each other for what is a high-quality asset?” he said. “So I would argue that, why not wait until the fall? There's no rush for them to have to go sell. Why not wait until all of these guys become free and are able to now look at another transaction?”

Devon could step in now with a significant offer for Double Eagle. But the company could just as easily say, “Thank you for your interest, but I want to see what everybody else is willing to pay.”

Trauber also addressed rumors about a possible sale of SM Energy, saying the company is in a unique category.

“I think everybody that is sub-sized in today’s marketplace should feel like they’re a potential target,” he said. “I know there’s been rumors about SM and other people coming together.”

The stumbling block is an asset base that is split between the Eagle Ford and the Permian.

“So I think there are some [potential buyers], but there’s a limited universe,” he said.

Worth noting: Devon, with an extensive portfolio in the Permian, made its most recent deal in August 2022 when the company closed a $1.8 billion acquisition of Valdus Energy in the Eagle Ford.