Marathon Oil to sell Norway business for $2.7 billionStaff writer ▼ | June 3, 2014
Marathon Oil Corporation has entered into a definitive agreement with Det norske oljeselskap ASA under which Det norske will purchase Marathon Oil's wholly owned subsidiary, Marathon Oil Norge AS, for a total transaction value of $2.7 billion.Marathon Oil Corporation has entered into a definitive agreement with Det norske oljeselskap ASA under which Det norske will purchase Marathon Oil's wholly owned subsidiary, Marathon Oil Norge AS, for a total transaction value of $2.7 billion.
After adjustment for debt, net working capital and interest on the net purchase price, Marathon Oil expects net proceeds of approximately $2.1 billion at closing. The effective date of the transaction is January 1, 2014.
The companies expect to close the transaction, subject to the necessary government and regulatory approvals, in the fourth quarter of this year.
"The sale of our Norway assets advances one of our key 2014 priorities and further demonstrates our commitment to rigorous portfolio management to simplify and concentrate our business," said Lee M. Tillman, Marathon Oil's president and CEO.
"Since becoming an independent E&P company in 2011, Marathon Oil has executed $6.2 billion of strategic divestitures repositioning the portfolio for future growth and profitability. The disciplined allocation of capital to opportunities that can deliver long-term growth at higher returns and improved margins is a strategic imperative.
"Marathon Oil has a deep inventory across three high-quality U.S. resource plays with expanding opportunities to further accelerate activity. Such organic growth will be our first priority for additional capital allocation, with the balance available for share repurchases under our remaining $1.5 billion board authorization and general corporate purposes.
The sale includes the Marathon Oil-operated Alvheim floating production, storage and offloading (FPSO) vessel, 10 Company-operated licenses and a number of non-operated licenses on the Norwegian Continental Shelf in the North Sea. Full-year 2013 net production in Norway averaged approximately 80,000 barrels of oil equivalent (BOE) per day.
After careful consideration of all bids, the Company received no acceptable offer for its U.K. North Sea business and has elected to retain those assets. ■