What the ConocoPhillips merger with Marathon means for Houston, Texas

KTRH Local Houston and Texas News

What the ConocoPhillips merger with Marathon means for Houston, Texas

ByJarett Lewis

Two Houston-based leaders in the oil industry have announced a merger.

ConocoPhillips says it will be buying Marathon Oil in a deal worth just more than $22 billion. Following the closing of the transaction, ConocoPhillips expects to reach at least $500 million in run rate cost and capital savings over the first year after the deal's completion.

Executive Vice President and Petroleum Economist with the Texas Alliance of Energy Producers Karr Ingham said this move continues the trend of larger companies growing even larger by acquiring or merging with smaller companies.

"Consolidation has been a very noticeable trend in the oil and gas business in the United States and here in Texas," said Ingham.

Ingham, owner of Ingham Economic Reporting, called the merger between ConocoPhillips and Marathon a "high-profile joining of companies."

"This is just the latest in a long string of these happenings," he said. "This is about increasing their production and their operational footprint all with the intent and likely outcome of providing greater value to their shareholders."

Ingham believes the merger will create more efficient energy production but he finds it hard to see where there won't be some layoffs with the joining of the two companies.

"While there may be localized negative impacts, they are generally positive in terms of the consumer outcome because of the production of energy resources and energy products that we all use in demand," Ingham said.

Other localized negative impacts that Ingham anticipates include some employment loss in Houston at company headquarters. However, he doesn't expect a negative hit to gas prices. Instead, he anticipates a positive trend due to greater efficiencies with a growing supply.