01—Abstract
Summary
Summary of the 8-K filed December 10, 2024. Cited figures are marked; the original filing is the authoritative source.
ConocoPhillips (COP) disclosed early results and pricing for cash tender offers run by its wholly owned subsidiary, ConocoPhillips Company (CPCo), along with early results of a concurrent exchange offer, all tied to debt issued by its acquired subsidiary Marathon Oil and several COP and CPCo series.
As of the Dec. 9, 2024 early tender deadline, about $2.67 billiona of Marathon's Any and All notes were tendered, and about $2.28 billion of the Maximum Offer notes were tendered. COP raised the Maximum Offer Reference Amount from $4.0 billion to roughly $4.04 to $4.05 billion, enough to accept all Maximum Offer notes in Acceptance Priority Levels 1 through 7 in full.
The financing condition was satisfied, and Marathon received the consents needed to amend the indentures for all six Any and All series. The offers are a liability management exercise. CPCo expects to accept the tendered 7.800%b and 7.000% Debentures, the 7.375%, 6.950%, 8.125%, 7.400% and 7.250% senior notes (Priority Levels 1 through 7), and none of the tendered notes at Priority Levels 8 through 13 (7.200% due 2031, 5.900% due 2032, 5.950% due 2036, 5.900% due 2038, 5.950% due 2046 and 6.500% due 2039).
Holders who tendered by the early deadline receive the Total Tender Offer Consideration, which includes a $50c per $1,000 early tender premium, plus accrued interest. Settlement of early-tendered notes is expected on Dec. 12, 2024.
The Maximum Offer and the exchange offers expire at 5:00 p.m. NYC time on Dec. 24, 2024 unless extended, and CPCo does not expect to accept Maximum Offer notes tendered after the early deadline.
For investors, the filing shows a sizable debt reduction and refinancing effort in which COP is retiring or exchanging higher-coupon legacy debt. The exchange offer is capped at $4 billiond of new CPCo notes, fully and unconditionally guaranteed by COP. About $854 million of Marathon notes had been tendered into it by the early deadline.
The filing does not disclose the total principal amount accepted, final proration, or the aggregate cash cost after settlement. Those details should be checked in later filings or the final results announcement.
02—Key points
Key Highlights
- Approximately $2.67 billion of Marathon Oil's Any and All notes (six series) were validly tendered by the Dec. 9, 2024 early deadline, and all six series received the consents needed to amend their indentures.
- Approximately $2.28 billion of Maximum Offer notes were tendered by the early deadline, and the Maximum Offer Reference Amount was increased to roughly $4.04-$4.05 billion, enough to accept all Priority Level 1-7 notes in full.
- The financing condition for the offers has been satisfied, so the tender offers are proceeding.
- Holders who tendered early receive the Total Tender Offer Consideration, which includes a $50 per $1,000 principal early tender premium, plus accrued interest, with early settlement expected Dec. 12, 2024.
- Priority Level 8-13 notes (including 7.200% due 2031, 5.900% due 2032, 5.950% due 2036, 5.900% due 2038, 5.950% due 2046 and 6.500% due 2039) will not be accepted based on expected early results, and tendered notes will be returned.
- The concurrent exchange offer for up to $4 billion of new CPCo notes, guaranteed by COP, had about $854 million of Marathon notes tendered by the early deadline; it expires Dec. 24, 2024 unless extended.
03—Questions
Frequently Asked Questions
What is the purpose of these tender and exchange offers?
The filing describes cash tender offers to purchase specified debt and a concurrent exchange offer. These transactions retire or exchange debt assumed from Marathon Oil and certain COP and CPCo notes. The 8-K does not explicitly state the strategic rationale, which is typically described in the Offer to Purchase and offering memorandum.
Which notes will COP actually buy back?
Based on early results, CPCo expects to accept all validly tendered 7.800% Debentures due 2027, 7.000% Debentures due 2029, 7.375% Senior Notes due 2029, 6.950% Senior Notes due 2029, 8.125% Senior Notes due 2030, 7.400% Senior Notes due 2031 and 7.250% Senior Notes due 2031. It expects to accept none of the tendered 7.200% due 2031, 5.900% due 2032, 5.950% due 2036, 5.900% due 2038, 5.950% due 2046 and 6.500% due 2039 notes, because the Maximum Offer is fully subscribed at the early deadline.
What will holders receive for notes tendered early?
Holders of notes validly tendered by the Dec. 9, 2024 early deadline and accepted receive the Total Tender Offer Consideration, which is set by a fixed spread over the bid-side yield of a reference U.S. Treasury security. That amount includes a $50 per $1,000 principal early tender premium, plus accrued and unpaid interest to the early settlement date. Per-series prices range from about $988.69 to $1,170.48 per $1,000 principal in the pricing release.
What is the significance of the consent solicitation?
Marathon received the requisite consents to adopt proposed amendments to the indentures for all six Any and All note series. The amendments eliminate certain covenants, restrictive provisions and events of default. Holders who tender into either the cash tender offer or the exchange offer are deemed to have consented, and the supplemental indenture has been executed with the trustee.
What are the key dates and remaining risks for investors?
The early settlement date is expected to be Dec. 12, 2024. The Maximum Offer and the exchange offers expire at 5:00 p.m. NYC time on Dec. 24, 2024 unless extended or terminated. CPCo reserves the right to waive conditions, extend, terminate, or amend the offers, and to change the Maximum Offer Reference Amount. Final proration, accepted amounts and total cash cost are not disclosed in this filing and should be confirmed in subsequent disclosures.
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