ConocoPhillips and Concho Resources entered into a definitive agreement in October 2020 for ConocoPhillips to acquire Concho in an all-stock transaction. Concho common stock will be exchanged for a fixed ratio of 1.46 shares of ConocoPhillips common stock, a 15% premium to the closing share prices on October 13th. The company's plan to capture $500 million of annual cost and capital savings by 2022. The combined company will be the largest independent oil and gas company with a resource base of 23 billion barrels of oil equivalent and production of 1.5 million barrels of oil equivalent per day.
The company plans to target an average reinvestment rate of less than 70% of cash from operations to fund distribution to shareholders. The new company will also be the first U.S.-based oil and gas company to target net-zero (Scope 1/2) emissions by 2050. Concho CEO Tim Leach will join the board of directors and serve as EVP of the Lower 48 business unit. Both boards have approved the deal which is subject to both ConocoPhillips and Concho shareholders. The transaction is expected to close in the first quarter of 2021. Goldman Sachs advised ConocoPhillips, and Credi Suisse and J.P. Morgan advised Concho.