Marathon Oil Corporation has announced it has signed an agreement to sell its Canadian subsidiary, which includes the Company’s 20% non-operated interest in the Athabasca Oil Sands Project (AOSP), to Shell and Canadian Natural Resources Limited for USD 2.5 billion in cash, excluding closing adjustments. Marathon Oil also announced the signing of a definitive agreement to acquire approximately 70,000 net surface acres in the Permian basin from BC Operating, Inc. and other entities for USD 1.1 billion in cash, excluding closing adjustments. The acquisition includes 51,500 acres in the Northern Delaware basin of New Mexico, and current production of approximately 5,000 net barrels of oil equivalent per day (boed).
“Divesting of our Oil Sands Mining business at an attractive value while also acquiring 70,000 net acres in the world-class Permian basin are transformative milestones that will further align our portfolio with our strategy,” Marathon Oil President and CEO Lee Tillman says. “Historically, our interest in the Canadian oil sands has represented about a third of our Company’s other operating and production expenses, yet only about 12% of our production volumes. The Northern Delaware basin features outstanding well economics that compete at the top of our organic portfolio and is experiencing a positive rate of change in well performance unrivalled in US unconventional basins. This deal expands the quality and depth of our already robust inventory while securing a foundational footprint in the Delaware basin with 5,000 feet of oil-rich stacked pay. Today’s announcements give us even greater focus and concentration on our diverse set of high-return opportunities in the US resource plays, and strongly position us to generate long-term value for our shareholders for many years to come.”
Under the terms of the Canadian divestiture, USD 1.75 billion will be paid to Marathon Oil upon closing and the remaining proceeds will be paid in first quarter 2018. The sale is expected to close in mid-2017 with an effective date of Jan. 1, 2017, and concurrent with a related transaction between Shell and Canadian Natural Resources. Proceeds will be used to fund resource capture, organic investment, to reduce gross debt and for general corporate purposes.