Marathon Sells Oil Sands Interest to CNR, Acquires Permian Acreage from BC Operating

Updated 4 years 3 months ago

Marathon announced it has signed an agreement to sell its Canadian subsidiary, including a 20% non-operated interest in the Athabasca oil sands project, to Shell and Canadian Natural Resources for $2.5 billion in cash. Marathon also announced the signing of an agreement to acquire approximately 70,000 net surface acres in the Permian basin from BC Operating and others for $1.1 billion in cash.


Under the terms of the Canadian divestiture, USD 1.75 billion will be paid to Marathon Oil upon closing and the remaining proceeds will be paid in first quarter 2018. The sale is expected to close in mid-2017 with an effective date of Jan. 1, 2017, and concurrent with a related transaction between Shell and Canadian Natural Resources, also announced today. Proceeds will be used to fund resource capture, organic investment, to reduce gross debt and for general corporate purposes. The acquisition from BC Operating, Inc. and others includes 51,500 acres in the Northern Delaware basin of New Mexico, and current production of approximately 5,000 net barrels of oil equivalent per day. The BC acquisition is expected to close in second quarter 2017 with an effective date of Jan. 1, 2017. Goldman Sachs and TD Securities served as advisors on the divestiture, and Evercore served as advisor on the acquisition. Transaction values exclude closing adjustments.

"Divesting of our Oil Sands Mining business at an attractive value while also acquiring 70,000 net acres in the world-class Permian basin are transformative milestones that will further align our portfolio with our strategy," Marathon CEO Lee Tillman said. "Historically, our interest in the Canadian oil sands has represented about a third of our Company's other operating and production expenses, yet only about 12% of our production volumes. The Northern Delaware basin features outstanding well economics that compete at the top of our organic portfolio and is experiencing a positive rate of change in well performance unrivaled in U.S. unconventional basins. This deal expands the quality and depth of our already robust inventory while securing a foundational footprint in the Delaware basin with 5,000 feet of oil-rich stacked pay."