HOUSTON – Marathon Oil Corp. is putting its natural gas-rich acreage in the Marcellus Shale formation up for sale as it trims non-core assets, people familiar with the situation said.
Marathon Oil is putting about 80,000 acres in West Virginia and Pennsylvania up for sale because the company doesn't consider them central to its growth plans, a person familiar with the company's plans said Wednesday. The company could realize up to $1,000 an acre, the person estimated, adding that a specific price hasn't been set yet.
Another person familiar with the company's thinking said that the move is part of Marathon's re-evaluation of its portfolio in the wake of last year's spin-off of its refining division.
Marathon Oil wouldn't comment "on rumors and speculation in the market," company spokeswoman Lee Warren said.
The Marcellus Shale, a vast shale rock formation underlying the northeastern U.S., has become a major source of natural gas because after companies began applying hydraulic fracturing there. The region could have up to 262 trillion cubic feet of technically recoverable natural gas, according to a 2009 Department of Energy study.
Marathon drilled its first Marcellus well in 2009. In 2011, it formed a joint venture to develop its acres with Triana Energy Investments LLC, an independent oil and gas exploration company backed by Morgan Stanley Private Equity.
But demand for natural gas hasn't kept up with escalating production, causing prices to drop below $3 a million British thermal units from nearly $16 in December 2005. More recently, Marathon and other energy producers have been focusing their drilling activities on more profitable oil fields.
Marathon, which was one of the first large oil companies to dabble in oil-rich shale regions such as South Texas's Eagle Ford shale, considers its Marcellus assets marginal to its operations.
"Natural gas in the U.S. is a victim of the industry's success," Marathon Oil Chief Operating Officer David Roberts said in a recent interview. "We started to diminish our focus on the Marcellus and we continued to have it as something that's further down our pecking order."
Copyright (c) 2012 Dow Jones & Company, Inc.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
More from this Author
Most Popular Articles
From the Career Center
Jobs that may interest you