Marathon sells interests in Canada
22 Aug 2003
Marathon Oil Corporation, through its wholly owned subsidiaries the Marathon Oil Company and Marathon International Petroleum Canada, has entered into definitive agreements with subsidiaries of Husky Energy for the sale of its upstream interests in Western Canada.
The transaction, which is valued at approximately $588 million net of working capital, is expected to close early in the fourth quarter of 2003, subject to necessary government approvals. The transaction does not include Marathon's exploration interests in Eastern Canada.
At the projected time of closing, Marathon's Western Canada assets will include booked reserves of approximately 69 million barrels of oil equivalent (boe) and average net production of approximately 21,000 barrels of oil equivalent per day (boed). Based upon the transaction value, the sales price of the reserves equates to approximately $8.50 per boe.
The pending sale of the company's Western Canada upstream interests is part of Marathon's 2003 asset rationalisation program, which it announced earlier this year. Other asset sales this year include Marathon's sale of its interest in CLAM Petroleum in the Netherlands for $100 million.
Upon closing of the sale of the Western Canada interests, Marathon will have sold more than 95 million boe in proved reserves and average daily production of approximately 30,000 boe, generating upstream proceeds of more than $745 million.
In addition, Marathon Ashland Petroleum LLC (MAP), in which Marathon holds a 62% interest, completed the sale of 190 Speedway SuperAmerica LLC retail sites in the Southeast United States for $140 million, and MAP has also sold other selected downstream assets for approximately $23 million.
The company now anticipates that these and other potential asset sales could exceed $1 billion, which is greater than the previous estimate of more than $700 million.Proceeds from these sales are being used to strengthen Marathon's balance sheet and invest in other high-potential business opportunities, including the recent acquisition of Khanty Mansiysk Oil Corporation (KMOC). Purchased for $282 million (including assumed debt), KMOC is located in western Siberia and has approximately 250 million barrels of proved and probable oil reserves, of which Marathon anticipates 85 million barrels will be booked in 2003.
The total potential resource associated with the KMOC assets is estimated to be 900 million barrels of oil. KMOC has current net production of approximately 15,000 boed, which is expected to increase to more than 60,000 boed within the next five years.
