Why ConocoPhillips Stock Tumbled Nearly 13% in October
Shares of ConocoPhillips (NYSE: COP) slumped 12.9% in October, according to data provided by S&P Global Market Intelligence. Weighing on the oil stock was an acquisition and its third-quarter earnings.
ConocoPhillips joined the recent wave of merger and acquisition (M&A) activity in the oil patch by agreeing to acquire Concho Resources (NYSE: CXO). The all-stock deal valued the Permian Basin producer at $9.7 billion, or $13 billion when including Concho's existing debt, a 15% premium. While that was a higher price than some other recent deals, it met Conoco's high-return hurdle rate, will add significant low-cost resources, and will be accretive to all its key financial metrics. The combined company expects to capture $500 million in cost savings by 2022 and return 30% of its cash flow to investors via dividends and share repurchases.
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