Marathon Oil Corporation has announced the signing of a definitive purchase and sale agreement to acquire PayRock Energy Holdings, LLC, a portfolio company of EnCap Investments, for USD 888 million. PayRock has approximately 61,000 net surface acres and current production of 9,000 net barrels of oil equivalent per day (boed) in the oil window of the Anadarko Basin STACK play in Oklahoma.

“Acquiring PayRock’s STACK position will meaningfully expand the quality and scale of Marathon Oil’s existing portfolio in one of the best unconventional oil plays in the US,” says Marathon Oil President and CEO Lee Tillman. “They’ve built a material position in the high margin oil window of the STACK, and have consistently delivered industry-leading well results. The recent moves we’ve taken to strengthen the Company’s balance sheet, including the successful execution above the top end of our non-core asset divestiture target, have positioned us to be opportunistic to acquire what is an excellent strategic fit.”

“We expect the 2016 capital program on the acquired acreage will be covered within our current USD 1.4 billion budget. As we look into 2017, we would anticipate a minimum four-rig drilling program in our pro forma STACK position, which will achieve leasehold drilling requirements while accelerating delineation work,” Tillman adds.

The transaction is subject to customary closing conditions and is expected to close in third quarter 2016, funded with cash on hand.

Tags: Marathon Oil Corporation, PayRock Energy Holdings LLC