The deal is expected to close in the first quarter of 2021.
Shareholders of Concho Resources will receive 1.46 ConocoPhillips shares for each Concho Resources share they own. The deal values Concho Resources at $49.30 a share.
The stock of Concho Resources closed Friday at $48.60 and was falling 1.05% to $48.08 in trading Monday. ConocoPhillips declined 1.72% to $33.19.
Bloomberg had reported last week that ConocoPhillips was in talks to buy Concho Resources.
"Together, ConocoPhillips and Concho will have the unmatched scale and quality across the important value drivers in our business: an enviable low cost of supply asset base, a strong balance sheet, a disciplined capital allocation approach, ESG excellence and great people," said ConocoPhillips CEO Ryan Lance in a statement Monday.
The merger creates a combined resource base of about 23 billion barrels of oil equivalent with a less than $40 per barrel West Texas intermediate cost of supply and an average cost of supply below $30 per barrel WTI, the companies said.
The move from ConocoPhillips, one of America’s largest independent oil explorers, would be a bold bet on shale during a historic industry downturn, noted Bloomberg in its report.
Concho Resources has a market value of about $9.56 billion, while the market cap for ConocoPhillips is $36.22 billion.
ConocoPhillips, Bloomberg reported, had been hinting about a potential deal for months. In July, Lance said the company was encouraged by the low premiums needed for acquisitions in the shale sector, citing Chevron’s (CVX) - Get Report deal to buy Noble Energy (NBL) - Get Report for about $5 billion.
“We’re looking at asset deals, we’re looking at asset deals, we’re looking at corporate deals, we look across the board,” Lance told Bloomberg at the time.
Chevron announced in July that it reached an agreement to acquire Noble Energy amid one of the most difficult routes in the oil patch in decades, sparked by the coronavirus pandemic.