Marathon Oil buys Eagle Ford shale assets for $3.5 billion

Marathon Oil Corp, a US-based oil and natural gas exploration and production company is buying oil and gas properties in Texas' Eagle Ford shale field from private equity firm Kohlberg Kravis Roberts & Co and Hilcorp Resources Holdings in a deal valued at $3.5 billion.

Under the deal, Houston, Texas-based Marathon, the fourth-largest integrated oil company in the US and its fifth largest refiner is buying approximately 141,000 net acres primarily in Atascosa, Karnes, Gonzales and DeWitt counties in Texas with the potential opportunity to acquire approximately 14,000 additional net acres through tag-along rights and other leasing.

Approximately 90 per cent of the acreages are operated with 65 per cent average working interest. 

As of 1 May 2011 there were 36 wells producing approximately 7,000 net barrels of oil equivalent (boe) per day, of which 80 per cent is liquids (three-fourths of which is crude oil and condensate). 

Year-end production is expected to be approximately 12,000 net boe per day with production expected to increase to approximately 80,000 net boe per day by 2016.

Marathon is paying nearly $20,000 per acre according to analysts, which is $4,000 more per acre than what Korean National Oil paid Anadarko Petroleum in March 2011.