Energy

Marathon Sells More Assets, Taking Toll to $1.3 Billion So Far in 2016

Jon C. Ogg

Published: April 11, 2016 4:58 pm

Last Updated: January 13, 2020 10:54 am

Marathon Oil Corporation (NYSE: MRO) is selling more assets. After the close of Monday’s trading, the company announced that it has signed agreements for the sale of certain non-core assets. The purchase/sale price was listed as being some $950 million.

Marathon had already started selling some assets in recent months. The company said that Monday’s agreements brought the total since just the end of 2015 to approximately $1.3 billion.

As far as how large or small this is on a relative basis, Marathon has a market cap of almost $10 billion based upon current share prices.

In the largest transaction, Marathon said that it will divest all of its Wyoming upstream and midstream assets for roughly $870 million. The upstream properties, made up primarily of waterflood developments in the Big Horn and Wind River basins, averaged 16,500 barrels of oil equivalent per day in first quarter 2016.

The assets sold also include the Red Butte pipeline, a 570-mile pipeline that is the only export line in the area. The effective date of this transaction is Jan. 1, 2016, and closing is expected mid-year 2016.

Marathon said that in separate transactions it has signed agreements for the sale of its 10% working interest in the outside-operated Shenandoah discovery in the Gulf of Mexico, natural gas operation assets in the Piceance basin in Colorado, and certain undeveloped acreage in West Texas. The combined total for those assets were listed as being approximately $80 million.

What may stand out here is that Marathon had previously given a target range for asset sales to the tune of $750 million to $1 billion. The company also indicated that ongoing portfolio management continues to move to a simpler structure with greater portfolio concentration. That will hopefully lead to lower risk and higher returns while continuing to protect Marathon’s balance sheet.

Marathon Oil’s net proved reserves at the end of 2015 are listed as being some 2.2 billion barrels of oil equivalent in North America, Europe and Africa.

Marathon closed down 0.9% at $11.67 Monday, versus a consensus analyst target price of $13.63 and versus a 52-week range of $6.52 to $31.53. Its shares were hardly changed in the after-hours trading session.