Marathon Oil Has About $1.1B in Asset-Sale Agreements So Far in 2012

Marathon Oil Corp. said it reached agreements for divestitures of about $1.1 billion so far this year, including the pending sale of the exploration and production company's Alaska Cook Inlet assets.

Marathon announced the sale of the Alaska assets earlier this year but hadn't disclosed financial terms. On Wednesday, Marathon estimated the deal at $375 million.

A total of about $700 million of the divestitures has been completed, Marathon said. The company has been aiming to shed $1.5 billion to $3 billion of assets under a program that began in 2011 and is expected to continue through 2013.

Marathon said it has discussed a potential sale of part of its 20% outside-operated interest in the Athabasca Oil Sands Project in Alberta, Canada. However, the potential proceeds haven't been included in its divestiture-program estimate, owing to uncertainty that a deal will be reached.

RBC Capital Markets analyst Scott Hanold said a sale of Marathon's stake in the oil-sands project could help the company invest in other potentially profitable assets it already owns.

"While the oil sands potentially have a lot of would certainly allow them to invest more capital into other things in their portfolio that have yet to be fully valued by the marketplace," Mr. Hanold said.

Last year, Marathon Oil spun off its downstream and petroleum assets, creating Marathon Petroleum Corp. (MPC), as it looks to focus its drilling efforts on unconventional U.S. oil shales, like the Bakken in North Dakota, Anadarko Woodford in Oklahoma and Eagle Ford in Texas.

The company on Wednesday also said it has continued efforts to expand in the Eagle Ford play in South Texas. So far this year, Marathon has acquired or reached agreements for nearly 25,000 additional net acres in the energy field for about $1 billion. Earlier this month, Marathon said it plans to let go of 100,000 acres in the formation that aren't in the core area of the play.

Mr. Hanold said the company's goal of producing 120,000 barrels of oil equivalent per day in the Eagle Ford by 2016--a nearly 100,000 barrel-a-day increase from the second quarter of this year--is "achievable."

Marathon also said it plans to offer two series of senior notes to help repay debt and for other purposes. Further terms weren't provided.

The company in August reported that its second-quarter earnings fell 61%, as lower prices for crude oil and natural-gas liquids hurt its exploration-and-production earnings, prompting the company to pare back its U.S. drilling activity.

Marathon is set to report third-quarter financial results Nov. 6.

Alison Sider contributed to this article.

Copyright (c) 2012 Dow Jones & Company, Inc.


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