Marathon to acquire Canadian firm Tarragon

June 8, 1998

Marathon Oil Co., Houston, has agreed to acquire Tarragon Oil & Gas Ltd., Calgary, in a deal valued at $1.1 billion (U.S.). The agreement is the latest in a long series of oil industry mergers and acquisitions. Marathon, a unit of USX Corp., Pittsburgh, has made a cash offer of $14.25 (Canadian)/share of Tarragon stock. As an alternative, Tarragon shareholders could choose to receive an exchange of equivalent shares of a wholly-owned Canadian subsidiary of Marathon. These shares would be

Marathon, a unit of USX Corp., Pittsburgh, has made a cash offer of $14.25 (Canadian)/share of Tarragon stock. As an alternative, Tarragon shareholders could choose to receive an exchange of equivalent shares of a wholly-owned Canadian subsidiary of Marathon. These shares would be exchangeable into USX-Marathon Group common stock.

Marathon would also assume Tarragon debt of about $340 million (U.S.).

The assets

Tarragon has exploration and production operations in Alberta, Sas- katchewan, British Columbia, and North Dakota. In April, Tarragon acquired most of the Canadian assets of Unocal Corp., El Segundo, Calif.

According to Marathon's estimates, Tarragon owns net reserves of 260.1 million boe (727 bcf of natural gas, 55 million bbl of light oil and NGL, and 84 million bbl of heavy oil). Its production is 210 MMcfd of gas and 21,000 b/d of liquids, and it holds undeveloped leases totaling 2.6 million acres.

Marathon said the acquisition of Tarragon would enable it to establish a platform for future growth in one of North America's most attractive gas basins.

Thomas J. Usher, chairman and CEO of USX Corp., said about the transaction, "We have increased our worldwide reserves by 20%, and the large undeveloped leasehold position we are acquiring provides Marathon multiple opportunities for growth in Canada."

Tarragon said its board has approved the offer, which will be presented to shareholders by August. Unocal holds 27% of Tarragon shares; investment fund Altamira Management Ltd. holds 10%.

The takeover bid for Tarragon is the latest of several takeovers of Canadian firms by U.S. companies, prompted in part by the Canadian dollar trading as low as 69¢ (U.S.).

In recent deals: Union Pacific Resources Co., Fort Worth, acquired Norcen Energy Resources Ltd., Calgary, for $3.7 billion (Canadian); Pioneer Natural Resources Co., Irving, Tex., bought Chauvco Resources Ltd., Calgary, for $1.3 billion (Canadian); Dominion Resources Inc., Houston, acquired Archer Resources Ltd., Calgary, for $183 million (Canadian).