Today, Marathon Oil Corporation (NYSE: MRO) proudly announced the completion of their purchase of Ensign Natural Resources’ Eagle Ford assets for a full cash payout of $3.0 billion following any closing modifications. This acquisition was initially communicated on November 2, 2022 and has now been finalized after extensive negotiation and many months in the works.
Chairman, president, and CEO Lee Tillman said in a statement-
“We are pleased to announce the close of our acquisition of Ensign’s high-quality assets in the core of the Eagle Ford Shale.”
He further added-
“This acquisition satisfies every element of our disciplined acquisition criteria. It’s immediately accretive to our key financial metrics, it will drive higher shareholder distributions consistent with our operating cash flow driven Return of Capital framework, it’s accretive to our inventory life with attractive locations that immediately compete for capital, and it offers truly compelling industrial logic given our existing Eagle Ford footprint and our track record of execution excellence in the play.”
Ensign Natural Resources’s holdings (99% operated, 97% working interest), span across four iconic counties in the condensate, wet gas and dry gas phase of Texas’s renowned Eagle Ford. Specifically these are Live Oak, Bee, Karnes and Dewitt Counties.
Marathon Oil is confident that, with a single rig and an annual target of 35-40 wells to sale, they can sustain production levels at 67,000 net boepd (22,000 net bopd of oil).
To value the asset, the Company employed a maintenance level program and did not factor in any synergy credits nor potential redevelopment upside. Furthermore, tangible assets can be fully expensed for income tax optimization purposes, providing an opportunity to defer Alternative Minimum Tax (AMT).
Marathon Oil (NYSE: MRO) is a renowned independent exploration and production company determined to harness the most profitable resources in the United States, including Eagle Ford in Texas, Bakken in North Dakota, STACK/SCOOP in Oklahoma and Permian Basin in New Mexico. Additionally the firm operates an integrated gas business centered on Equatorial Guinea; thereby further enhancing their presence within this domain.
With a well-defined plan and an ever increasing presence in the market, MRO is confident of meeting their goal of improving the value of their shareholders by expanding and utilizing the most efficient techniques in their current operations.
This latest addition to their portfolio is sure to prove beneficial to the firm. How it will affect the company’s share price remains to be seen, but one thing is certain: Marathon Oil is taking a big step in the right direction.
It looks like Marathon Oil is making an exciting move to diversify and capitalize on their operations. We look forward to seeing how this plays out in the future.
Shivendra Tiwari is an Engineer and an MBA in Marketing. He is the Content head at Marketing91 and a thorough Online Marketing enthusiast. Shivendra loves to follow different brands and study their Business and Marketing tactics.