Marathon Oil Corporation to purchase Eagle Ford acreage for $3.5 billion

[News_Editor]

Marathon Oil Corporation to purchase Eagle Ford acreage for $3.5 billion

2011-06-01 21:21:03 GMT+7 (ICT)

HOUSTON, TEXAS (BNO NEWS) -- Marathon Oil Corporation on Wednesday announced that it had reached a definitive agreement to purchase Hilcorp Resources Holdings' assets in the core of the Eagle Ford shale formation in Texas for $3.5 billion.

Marathon Oil Corporation's Hilcorp acreage acquisition would include approximately 141,000 net acres (217,000 gross) primarily in Atascosa, Karnes, Gonzales and DeWitt counties in Texas and approximately 90 percent operated with 65 percent average working interest.

As of May 1, Hilcorp had 36 wells producing approximately 7,000 net (17,000 gross) barrels of oil equivalent (boe) per day, of which 80 percent is liquids (three-fourths of which is crude oil and condensate).

In addition, another 10 wells had been drilled and were awaiting completion, as six rigs are currently operating and two dedicated hydraulic fracturing crews.

Furthermore, Hilcorp's year-end production expected to be approximately 12,000 net boe per day with its production expected to increase to approximately 80,000 net boe per day by 2016. 

"Marathon has captured a top-five acreage position in the core of the premier resource play in the U.S. since first entering the Eagle Ford in November 2010," said Clarence P. Cazalot Jr., Marathon president and CEO, adding that the transaction enhances the company's already strong North America position "focused on unconventional, liquids-rich resource plays that provide low-risk, scalable and profitable growth."

"This and other projects under development serve as a catalyst for Marathon to increase our projected Upstream production growth to 5 - 7 percent on a compound average annual growth rate during the period 2010 - 2016," Cazalot Jr. added.

In addition to the six rigs currently under contract related to this acquisition and two in Marathon's other Eagle Ford acreage, Marathon has five drilling rigs on order and expects to be operating at least 20 drilling rigs in the Eagle Ford within 12 months of closing this transaction.

As a result, the Company expects to grow production from its total Eagle Ford acreage position to a peak of approximately 100,000 net boe per day by 2016.

This acquisition brings Marathon's holdings to nearly 1 million net acres across North American liquids-rich resource plays in the Eagle Ford, North Dakota Bakken, Oklahoma Anadarko Woodford, the emerging Niobrara in Colorado and Wyoming, and an in-situ position in Alberta Canada.

Hilcorp Resources Holdings is a partnership between affiliates of Hilcorp Energy Company and Kohlberg Kravis Roberts & Co. LP.

The transaction is expected to close in November 1 with an effective date of May 1 and is subject to closing adjustments, customary terms and conditions, and Hart-Scott-Rodino approval.

-- © BNO News All rights reserved 2011-06-01