Marathon Oil Corporation reported Wednesday that it has entered into a sale and purchase agreement with Agriterra to acquire its 20-percent working interest in the South Omo concession in Ethiopia. The deal further serves to highlight the increasing importance of the East African region to international oil businesses.
Marathon and Agriterra expect to close the transaction, subject to completion of the necessary Ethiopian government approvals, before the end of the year.
Tullow Oil is the operator of the South Omo concession with a 50-percent working interest, and Africa Oil holds the remaining 30-percent working interest. The concession has an area of approximately 11,326 square miles. Marathon expects an exploration well to spud at South Omo in the fourth quarter of 2012.
In consideration for the assignment of these interests, Marathon Oil will pay Agriterra $40 million, before closing adjustments, with an additional payment of $10 million due upon Marathon Oil's participation in a declaration of a commercial discovery.
"This acquisition is a strong addition to Marathon Oil's position in the Tertiary rift trend onshore East Africa and is on trend with the recent Ngamia-1 discovery in Kenya," said Annell Bay, Marathon Oil head of global exploration, in a statement. "We are excited to build on our partnership with Tullow and Africa Oil."
The deal comes on the back of a number of deals by international energy companies to gain a foothold in the burgeoning East Africa region in recent years. The most high profile of these was PTTEP's takeover battle with Shell this spring to gain control of Cove Energy – which holds an 8.5-percent interest in Mozambique's gas-rich Rovuma Basin.
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