Marathon Oil to sell $950mn in assets

OREANDA-NEWS. April 12, 2016. US independent Marathon Oil has signed agreements to sell non-core assets worth \\$950mn as it seeks to shore up its balance sheet amid a weak oil market.

The agreements bring the total asset sales by the independent to \\$1.3bn since August last year, exceeding a target of \\$750mn-\\$1bn, it said.

"Ongoing portfolio management continues to drive the simplification and concentration of our portfolio to lower risk, higher return US resource plays and support our 2016 objective of balance sheet protection," chief executive Lee Tillman said in a statement.

The largest in the latest transaction is the sale of all of its Wyoming upstream and midstream assets for \\$870mn. The upstream properties include developments in the Big Horn and Wind River basins, where output averaged 16,500 b/d of oil equivalent (boe/d) in the first quarter. It includes the 570-mile long Red Butte pipeline, the only export line in the area. The effective date for the transaction is 1 January and is expected to close by the middle of the year.

It also signed agreements for the sale of its 10pc working interest in the Shenandoah discovery in the US Gulf of Mexico (GoM), operated natural gas assets in the Piceance basin in Colorado and some undeveloped acreage in west Texas, for a combined total of about \\$80mn, it said.

Stepping up assets sales and reworking debt agreements with banks are some of the measures independent oil and gas producers are deploying to cope with the prolonged oil market weakness that saw prices dip below \\$30/bl in the first quarter. Producers have already made steep cuts to capital expenditure (capex) of as much as 80pc, slashed dividends and idled drilling rigs.

Marathon Oil posted a loss of \\$2.2bn for 2015 versus a profit of \\$3.05bn a year earlier. It lowered its 2016 capex guidance to \\$1.4bn, 50pc lower than 2015 and 75pc below the 2014 level.