Marathon's Angola Stake Not Going to China After All (MRO, CEO, SNP, TOT, XOM)

Energy

Published: September 24, 2009 9:29 am

Last Updated: September 24, 2009 2:40 pm

Angola’s state-owned oil company, Sonangol, has exercised its right of first refusal to purchase a 20% stake in block 32 offshore Angola from Marathon Oil Corp. (NYSE:MRO). In July, Marathon announced that it had reached a definitive agreement with China’s CNOOC Ltd. (NYSE:CEO) and China Petroleum & Chemical Corp. (Sinopec; NYSE:SNP) to sell Marathon’s working interest in block 32 to the two Chinese companies for $1.3 billion. Sonangol’s action pulls an estimated 300 million barrels of reserves out of Chinese hands.

Sonangol’s purchase raises its stake in the block to 40%. The operator is France’s Total SA (NYSE:TOT), which holds a 30% share. Exxon Mobil Corporation holds a 15% share in the block and Portugal’s Galp Energia owns a 5% share. Marathon will retain a 10% working interest in the block, which is believed to contain about 1.5 billion barrels. Production is expected to begin in about three years.

Shares of CNOOC and SNP are off slightly in pre-open trading, and Marathon is unchanged.

Paul Ausick

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