Marathon Oil Announces $700 Million Northern Delaware Acquisition
March 21 2017 - 6:30AM
Marathon Oil Corporation (NYSE: MRO) announced today the signing of
a definitive agreement to acquire approximately 21,000 net surface
acres largely in the Permian’s Northern Delaware basin of New
Mexico from Black Mountain Oil & Gas and other private sellers
for $700 million in cash, excluding closing adjustments.
“Today’s 21,000 acre bolt-on in the Northern Delaware is an
excellent fit with the basin entry acquisition we announced earlier
this month. The combined deals provide us more than 90,000 acres in
the Permian, over 70,000 of which is concentrated in the Northern
Delaware," Marathon Oil President and CEO Lee Tillman said. “While
we expect to pursue additional trades and grassroots leasing, this
bolt-on achieves the scale necessary for efficient long-term
development in the basin.”
Black Mountain Acreage Highlights:
- Up to 10 target benches within approximately 5,000 feet of
stacked pay; base case assumes up to 6 target benches
- Approximately 21,000 net acres with 20,000 net acres in the
Northern Delaware basin; primary targets in world-class Wolfcamp
and Bone Spring; roughly 400 boed of current production
- Approximately 230 million BOE of risked resource with 440 gross
Company operated locations
- Approximately 550 million BOE of total resource potential with
950 total gross Company operated locations
- High quality Northern Delaware inventory produces greater than
90% before-tax IRRs at $55 WTI flat and competes for capital
allocation at top of Marathon Oil’s portfolio
Combined Permian Acreage Highlights:
- Approximately 91,000 net Permian acres including 71,500 in the
Northern Delaware
- Implied total acreage cost of $18,400 per acre, or $23,400 per
Northern Delaware acre, adjusting for existing production
- Approximately 580 million BOE of risked resource with 1,070
gross Company operated locations
- Approximately 1.45 billion BOE of total resource potential with
2,650 total gross Company operated locations from both tighter
density and secondary targets
- Further upside opportunities from 18,500 net acres in Northwest
Shelf
- One operated rig drilling with plans to add two more rigs
mid-year
The Black Mountain acquisition is expected to close in second
quarter 2017 with an effective date of March 1, 2017.
###
Definitions:BOE: barrels of oil equivalentBOED: barrels of oil
equivalent per dayIRR: Internal rate of returnWTI: West Texas
intermediate crude
This release (and oral statements made regarding the subjects of
this release) contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934, including statements
related to the Company’s 2017 capital program and the program
objectives and flexibility; the proposed Permian basin acquisition
and expected timing and projected impacts, including valuation,
resource estimates, production estimates, asset quality and
internal rates of return; the Company’s operational, financial and
growth strategies, including drilling plans, rig count, asset
development, planned projects, capital discipline, balance sheet
protection, operational flexibility, cost reductions, efficiencies
and non-core asset sales; and the Company’s ability to successfully
effect those strategies and the expected timing thereof. While the
Company believes that the assumptions concerning future events are
reasonable, a number of factors could cause results to differ
materially including, but not limited to: conditions in the oil and
gas industry; capital available; drilling and operational risks,
well production timing; availability of drilling rigs, materials
and labor, including the costs associated therewith; the inability
to obtain or delay in obtaining necessary government or third-party
approvals and permits; the inability of any party to satisfy
closing conditions with respect to the acquisition; and any
non-performance by third parties of their contractual obligations.
These forward-looking statements are also affected by the risk
factors, forward-looking statements and challenges and
uncertainties described in the Company's 2016 Annual Report on Form
10-K and other public filings and press releases, available at
www.marathonoil.com. Except as required by law, the Company
undertakes no obligation to revise or update any forward-looking
statements as a result of new information, future events or
otherwise.
Cautionary Note to Investors - The U.S. Securities and Exchange
Commission (“SEC”) permits oil and gas companies, in their filings
with the SEC, to disclose only proved, probable and possible
reserves that meet the SEC’s definitions for such terms. Any
resource estimates in this release, such as risked resource or
total resource potential, that are not specifically designated as
being estimates of proved, probable or possible reserves, may
include other estimated resources that the SEC's guidelines
prohibit us from including in filings with the SEC. Investors are
urged to closely consider the disclosures in the Company’s periodic
filings with the SEC, available at www.marathonoil.com or on the
SEC’s website at www.sec.gov.
Media Relations Contact
Lee Warren: 713-296-4103
Investor Relations Contact
Zach Dailey: 713-296-4140
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