By OGJ editors
HOUSTON, Aug. 20 -- Husky Energy Inc., Calgary, agreed to acquire Marathon Canada Ltd. and the Western Canadian assets of Marathon International Petroleum Canada Ltd. for $599 million. Both Marathon Canada and Marathon International are subsidiaries of Marathon Oil Corp., Houston.
The transaction, expected to close early in the fourth quarter, does not include Marathon's exploration interests in eastern Canada.
Meanwhile in a separate deal, Husky already agreed to sell some of the properties for $320 million to EOG Resources Inc., Houston. The deal involves Marathon Canada natural gas properties.
The transaction value, reserves, and working interest in the properties are subject to adjustment if perferential rights on the properties are exercised. That deal is expected to close Oct. 1, Husky said.
EOG said the properties are adjacent to existing EOG operations or are properties in which EOG already has a working interest.
The properties involve 34 MMcfed of production and 275 bcfe of proved reserves, both net to EOG. Additional, the acquisition will allow EOG access to at least 100 net bcfe of probable reserves.
Husky said it would keep the properties in Alberta and northeastern British Columbia, which produce 90 MMcfd of gas and 4,500 b/d of crude oil and natural gas liquids.
"The purchase of Marathon Canada will complement our existing Western Canada property base," said Pres. and CEO John C.S. Lau. Hong Kong tycoon Li Ka-shing controls Husky.
The sales price of the reserves equates to $8.50/boe, a Marathon news release said.
"This sale is part of our ongoing efforts to high grade Marathon's asset portfolio, which includes selling assets that no longer provide a strategic fit, reinvesting in new core areas. . .and strengthening our balance sheet," said Clarence P. Cazalot Jr., Marathon president and CEO.
The pending sale of the company's Western Canada upstream interests is part of Marathon's asset rationalization program. Other asset sales this year include Marathon's sale of its 50% interest in Clam Petroleum BV to its joint venture partner, Burlington Resources Inc., Houston, for $100 million (OGJ, June 9, 2003, p. 30).
