Marathon Oil Corp. an integrated energy company engaged in exploration, production, refining, marketing and transportation operations reported that it had reached an agreement to purchase South Texas oil assets owned in a part by Kohlberg Kravis Roberts & Co. for $3.5 billion.
This deal represented as one of the largest deals yet in the Eagle Ford oil and gas shale (an area in south central Texas permitted companies to unlock oil and natural gas trapped in shale rock).
Marathon Oil Corp. NYSE:MRO would buy the principal assets of Hilcorp Resources Holdings, represented a partnership between Kohlberg Kravis Roberts & Co and Hilcorp Energy Corp. to develop Eagle Ford land.
Meanwhile, Chinese state oil company Cnooc Ltd. (CEO) and Norwegian oil giant Statoil ASA (STO) were other chief investors in shale.
Kohlberg Kravis Roberts & Co stated on announcing the deal that this acquisition would project MRO 141,000 acres in the Eagle Ford along with the opportunity to purchase supplementary 14,000 additional acres.
Within 12 months of closing this deal, Marathon would operate 35 – 40 rigs across the U.S.
KKR’s stocks of the transaction significantly worth around $1.13 billion and Hilcorp would get the remaining proceeds. Furthermore, the sale would likely to close in the fourth quarter.
Baker Botts would be the legal advisor to NYSE:MRO for this transaction and Barclays Capital would represent as the financial advisor.
The legal advisor to Hilcorp Energy for this transaction would be Andrews Kurth LLP and the legal advisor to KKR would be Simpson, Thacher & Bartlett, LLP.
This acquisition once again portrayed North America attractive in the eyes of international oil companies that found themselves bolted out of oil opportunities in developing countries due to state control of the assets.
Marathon Chief Executive, Clarence P. Cazalot Jr. shared his views that this opportunity projected the resource opportunities in the U.S.
Morgan Stanley analyst, Evan Calio critically stated that this acquisition would be a critical first step in raising its production with respect to other major oil companies as MRO planned to shed its refining segment and looking forward to become an exploration and production company.
The company reported that it would purchase enough additional acreage in the Eagle Ford region to enlarge its holdings to 285,000 acres by the end of 2011 to more than double.
