Eagle Ford, Texas, sold to Marathon Oil

In Eagle Ford, Texas, Marathon Oil completes a €3 billion transaction and doubles the size of its basin.

Partagez:

In Eagle Ford, Texas, Marathon Oil completes a $3 billion transaction and doubles the size of its basin .

A promising acquisition

At Eagle Ford, Marathon Oil is acquiring the Eagle Ford assets from Ensign Natural Resources. The company is expected to complete the transaction by the end of 2022. The Eagle Ford transaction results in a significant financial accumulation for the company.

Thus it allows an improvement of the return on capital. Finally, the company maintains a convincing industrial logic as well as a track record in investment quality. The transaction significantly and immediately improves Marathon Oil‘s key financial indicators .

As such, it is expected to result in a 17% increase in cash flow from operations in 2023. In addition, it would increase free cash flow by 15%. The company is making the transaction at approximately 3.4 times 2023 EBITDA.

As the transaction improves Marathon Oil’s cash flow profile, it immediately improves distributions to shareholders. The increase is carried out in accordance with the company’s capital repayment framework. Marathon Oil aims to return at least 40% of annual operating cash flow to shareholders.

In fact, the company expects to increase its distribution capacity to shareholders in 2023 by approximately 17%. In addition, the company plans to increase its quarterly base dividend by an additional 11% after the transaction. Marathon Oil still expects to achieve its goal of returning at least 50% of adjusted operating cash flow to shareholders.

A solid outlook

This transaction expands Marathon Oil’s position with the addition of 130,000 net acres, or approximately 526 square kilometers. This acquisition includes a 97% working interest located mainly in prolific condensate and wet gas areas. In addition, the company estimates that it is acquiring over 600 undrilled locations.

The acquisition of Marathon Oil represents an inventory life of over 15 years. These stocks immediately compete for capital in the company’s portfolio. The acreage is adjacent to the existing Eagle Ford position.

The situation allows the company to further leverage its experience and operational strengths in the basin. This increases the company’s basin area to 290,000 net acres, or approximately 1174 square kilometers. This increase contributes to optimize supply chain accessibility and cost control.

The company’s acquisition also includes 700 existing wells. Most were entering service before 2015 with first-generation designs. These existing locations have the potential for upward redevelopment. However, this has not been taken into account in the valuation of the assets or the inventory by the company.

Marathon Oil plans to finance the transaction with a combination of cash and debt. The company is taking out these loans on the company’s revolving credit facility and a new callable debt. The company does not expect the transaction to significantly affect its debt profile.

Argentine company Compañía General de Combustibles is starting operations in the Vaca Muerta shale basin while boosting heavy crude production due to strong local demand and rising prices.
Argentine company Compañía General de Combustibles is starting operations in the Vaca Muerta shale basin while boosting heavy crude production due to strong local demand and rising prices.
Oil-backed financing is weakened by falling crude prices and persistent production constraints in the country.
Oil-backed financing is weakened by falling crude prices and persistent production constraints in the country.
Italiana Petroli, in negotiations with three potential buyers, is expected to finalize the total sale of the group for around €3 billion by late June, according to several sources close to the matter speaking to Reuters on Thursday.
Italiana Petroli, in negotiations with three potential buyers, is expected to finalize the total sale of the group for around €3 billion by late June, according to several sources close to the matter speaking to Reuters on Thursday.
ExxonMobil has been named the most admired upstream exploration company in Wood Mackenzie’s latest annual survey, recognised for its performance in Guyana and its ability to open new resource frontiers.
ExxonMobil has been named the most admired upstream exploration company in Wood Mackenzie’s latest annual survey, recognised for its performance in Guyana and its ability to open new resource frontiers.
Petronas' workforce reduction reignites questions about internal trade-offs, as the group maintains its commitments in Asia while leaving uncertainty over its operations in Africa.
Petronas' workforce reduction reignites questions about internal trade-offs, as the group maintains its commitments in Asia while leaving uncertainty over its operations in Africa.
The Kremlin condemns the European proposal to lower the price cap on Russian oil to $45 per barrel, asserting that this measure could disrupt global energy markets, as the G7 prepares for decisive discussions on the issue.
The Kremlin condemns the European proposal to lower the price cap on Russian oil to $45 per barrel, asserting that this measure could disrupt global energy markets, as the G7 prepares for decisive discussions on the issue.
Libya's oil production reached a twelve-year high of 1.23 million barrels per day, even as persistent political tensions and violent clashes in Tripoli raise concerns about the sector's future stability.
Libya's oil production reached a twelve-year high of 1.23 million barrels per day, even as persistent political tensions and violent clashes in Tripoli raise concerns about the sector's future stability.
According to a study published by The Oxford Institute for Energy Studies, two competing financial algorithms, Risk-Parity and Crisis Alpha, significantly influence oil markets, weakening the traditional correlation with the sector's physical fundamentals.
According to a study published by The Oxford Institute for Energy Studies, two competing financial algorithms, Risk-Parity and Crisis Alpha, significantly influence oil markets, weakening the traditional correlation with the sector's physical fundamentals.
Norwegian producer DNO ASA completed an oversubscribed $400mn hybrid bond private placement to support the integration of Sval Energi Group AS.
Norwegian producer DNO ASA completed an oversubscribed $400mn hybrid bond private placement to support the integration of Sval Energi Group AS.
The Brazilian oil group secured approval from Abidjan to begin negotiations for exploring nine deepwater blocks as part of its business partnerships strategy in Africa.
The Brazilian oil group secured approval from Abidjan to begin negotiations for exploring nine deepwater blocks as part of its business partnerships strategy in Africa.
Shell suspends a unit at its Pennsylvania petrochemical complex following a fire on June 4, with ongoing environmental checks and an internal investigation to determine when the facility can resume operations.
Shell suspends a unit at its Pennsylvania petrochemical complex following a fire on June 4, with ongoing environmental checks and an internal investigation to determine when the facility can resume operations.
Baku signs multiple deals with major industry players to boost exploration as oil reserves decline and ACG production slows.
Baku signs multiple deals with major industry players to boost exploration as oil reserves decline and ACG production slows.
French group Vallourec announces the integration of Thermotite do Brasil, enhancing its industrial capabilities in Brazil for offshore pipeline coating services.
French group Vallourec announces the integration of Thermotite do Brasil, enhancing its industrial capabilities in Brazil for offshore pipeline coating services.
Commercial crude reserves in the United States declined more than expected, following increased refinery activity according to EIA data published on June 4.
Commercial crude reserves in the United States declined more than expected, following increased refinery activity according to EIA data published on June 4.
TotalEnergies has signed an agreement with Shell to increase its stake in Brazil’s offshore Lapa field to 48%, while divesting its interest in Gato do Mato.
TotalEnergies has signed an agreement with Shell to increase its stake in Brazil’s offshore Lapa field to 48%, while divesting its interest in Gato do Mato.
SBM Offshore has signed a divestment agreement with GEPetrol to fully withdraw from the FPSO Aseng project in Equatorial Guinea, with an operational transition phase of up to one year.
SBM Offshore has signed a divestment agreement with GEPetrol to fully withdraw from the FPSO Aseng project in Equatorial Guinea, with an operational transition phase of up to one year.
Meren Energy has launched a partial divestment process for its EG-18 and EG-31 assets to attract new partners and reduce its exposure in Equatorial Guinea.
Meren Energy has launched a partial divestment process for its EG-18 and EG-31 assets to attract new partners and reduce its exposure in Equatorial Guinea.
The oil services joint venture extends its contract with Brunei Shell Petroleum for maintenance and upgrade operations on offshore installations in the South China Sea.
The oil services joint venture extends its contract with Brunei Shell Petroleum for maintenance and upgrade operations on offshore installations in the South China Sea.
Renaissance Africa Energy confirmed to the Nigerian government the operational takeover of Shell Petroleum Development Company’s onshore assets, stating it had surpassed the 200,000 barrels per day production mark.
Renaissance Africa Energy confirmed to the Nigerian government the operational takeover of Shell Petroleum Development Company’s onshore assets, stating it had surpassed the 200,000 barrels per day production mark.
Australian company Woodside Energy has filed a complaint with ICSID against Senegal, challenging a CFA40bn tax reassessment related to the offshore Sangomar oil project.
Australian company Woodside Energy has filed a complaint with ICSID against Senegal, challenging a CFA40bn tax reassessment related to the offshore Sangomar oil project.