Marathon Oil ponders partial sale of Athabasca oil sands stake

Marathon Oil Corp. is discussing a potential sale of part of its 20% outside-operated interest in the Athabasca oil sands project in Alberta, and it also is expanding its holdings in the South Texas Eagle Ford shale play through one completed acquisition and one pending acquisition.

The divestiture and acquisitions were outlined as Marathon Oil issued a news release updating its previously announced plans to divest $1.5-3 billion during 2011-13.

As of Oct. 24, Marathon Oil has entered into agreement to sell $1.1 billion, of which more than $700 million worth of divestitures have closed.

The $1.1 billion total includes the pending sale of Marathon Oil’s Alaska Cook Inlet assets for $375 million, which remains subject to price adjustments. The Alaska Attorney General is reviewing the Cook Inlet transaction.

Regarding the Eagle Ford, Marathon Oil entered the play by agreeing to pay Denali Oil & Gas $10 million in a transaction involving assets in the South Texas counties of Wilson and Atascosa (OGJ Online, Nov. 29, 2010).

During 2012, Marathon Oil acquired Paloma Partners II LLC for $750 million to obtain more than 17,100 net acres. A separate $227 million acquisition that remains pending will provide Marathon Oil with 4,300 net acres. The Paloma Partners deal closed in August while the pending transaction is expected to close in the fourth quarter.

Marathon Oil said the pending acquisition overlaps its operated Eagle Ford acreage, which produces 2,900 net boe/d. The acquisition will add 40 net drilling locations.

Upon closing of the latest Eagle Ford acquisition, Marathon Oil will hold 225,000 net acres what it calls the core of the liquids play.

Meanwhile, Marathon Oil is looking to sell another 100,000 net acres in parts of the Eagle Ford that are considered noncore areas. The company expects to provide an expanded update during its Nov. 6 third-quarter earnings call.

Last year, Marathon Oil completed the spinoff of its downstream business, Marathon Petroleum Corp., making Marathon Oil an independent upstream company based in Houston. Marathon Petroleum became an independent refiner based in Findlay, Ohio (OGJ Online, July 1, 2011).

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