Marathon to Offload Angola Stake

Integrated energy major Marathon Oil Corp. (MRO - Analyst Report) announced the sale of its 20% interest in a block offshore Angola for $1.3 billion. In this regard, Marathon has reached an agreement with a unit of Angola’s state-owned oil company, Sociedad Nacional De Combustiveis De Angola (SONANGOL).
 
The transaction, which is expected to close in January 2010, will see Marathon’s stake in the Angola Block 32 come down to 10% (from the current 30%). On the other hand, SONANGOL, already one of the operators of Block 32 with 20% interest, will double its share to 40%. Other partners in the block include Total SA (TOT - Analyst Report) of France with a 30% operated interest, a unit of ExxonMobil Corp. (XOM - Analyst Report) with 15%, and state-owned Petroleos de Portugal with 5%. 
 
SONANGOL’s move comes after Marathon’s July announcement that it was selling the stake to Chinese oil companies CNOOC Ltd. (CEO - Analyst Report) and Sinopec (SNP - Analyst Report). The Angolan national oil company exercised its contractual right of first refusal to block the sale. Block 32 is located in the subsea Angolan oilfield, some 150 kilometers off the country's coast in a water depth of 1400 to 2200 meters. Estimated to have 1.5 billion barrels of oil reserves, the 5,090-square-kilometer field has already yielded 12 successful exploration wells.
 
The African property sale marks the latest in the U.S. energy giant’s asset-repositioning program and is part of the company’s focus to tighten the focus around its upstream portfolio. Through the partial divestment of the Angola interest, Marathon hopes to redeploy capital into other growth regions for the company by unlocking the significant amount of value being created through its exploration success. At the same time, maintaining a 10% interest in Block 32 provides Marathon with exposure to this high quality oil-bearing reservoir.
 
Houston, Texas-based Marathon Oil is a leading integrated oil and gas company with extensive upstream and downstream operations. We currently rate Marathon shares as Neutral.

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