Under the agreement, each share of Concho will be exchanged for a fixed ratio of 1.46 shares of Conoco. The transaction, which is subject to the approval of both Conoco and Concho shareholders, regulatory clearance, and other customary closing conditions, is expected to close in Q1 2021.
DBRS Morningstar notes that Concho is one of the largest unconventional shale producers in the
Upon successful completion of the acquisition, DBRS Morningstar believes that the transaction will add modestly to Conoco's size, enhance the Company's capital flexibility by enabling the Company to allocate capital to the highest-margin assets, and provide an opportunity to reduce costs through successfully realizing envisaged synergies. However, the addition of Concho's high-decline unconventional production in the
DBRS Morningstar expects to resolve the Under Review with Developing Implications status by closing of the deal. At this time, DBRS Morningstar views that the transaction overall will likely have no impact on the overall Issuer Rating of Conoco, which was 'A' with a Negative trend prior to being placed Under Review with Developing Implications. The trend, at the time the transaction closes, will depend on the pace and degree of recovery in crude oil markets and pricing.
ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.
Notes:
All figures are in
The principal methodologies are Rating Companies in the Oil and Gas and
For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrsmorningstar.com.
This rating was not initiated at the request of the rated entity.
The rated entity or its related entities did not participate in the rating process for this rating action. DBRS Morningstar did not have access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.
This is an unsolicited credit rating.
Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.
For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.
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Ratings
Date Issued Debt Rated Action Rating Trend Issued
i
US =
CA = Canada Issued, NRSRO
EU = EU Issued, NRSRO
E = EU endorsed
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-Participating
20-Oct-20 Issuer Rating UR-Dev. A -- CA
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