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Marathon Oil (MRO) to Acquire Eagle Ford Assets in $3B Deal

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Marathon Oil Corporation (MRO - Free Report) recently declared that it agreed to buy the Eagle Ford assets of Ensign Natural Resources for total cash consideration worth $3 billion. The deal is subject to customary terms and conditions, including closing adjustments.

Further, the deal is anticipated to be concluded by year-end 2022 and will result in MRO approximately doubling its position in South Texas' Eagle Ford shale basin.

The Houston, TX-based firm expects the transaction to be immediately and significantly accretive to its key financial metrics. Moreover, it will drive 17% growth in the company’s 2023 operating cash flow and a 15% rise in its free cash flow.

Marathon Oil stated that the acquisition adds 130,000 net acres adjacent to its existing Eagle Ford position, with a 97% working stake, mainly situated in the prolific condensate and wet-gas windows of the play. This allows the firm to leverage its knowledge, experience and operating strengths in the region while materially augmenting its Basin-scale to 290,000 net acres.

Marathon Oil anticipates gaining 600 undrilled locations, representing an inventory life of more than 15 years. Moreover, the company stated that the acquisition comprises 700 existing wells, a majority of which were completed before 2015 with early-generation completion designs, thus offering the potential for upside redevelopment.

MRO expects to fund the deal with a combination of cash on hand, borrowings on the firm's revolving credit facility and new prepayable debt.

Incorporated in 2001, Marathon Oil Corporation is a leading oil and natural gas exploration and production company with operations in the United States and Africa.

As of the end of 2021, Marathon Oil had approximately 1,106 million oil-equivalent barrels in net proved reserves (52% crude oil/condensate and 68% proved developed), and 89% were located in the United States. In 2021, the company’s overall production from continuing operations was 347,000 net barrels of oil equivalent per day.

Marathon Oil currently carries a Zacks Rank #3 (Hold). Investors interested in the energy space might look at some better-ranked stocks — Par Pacific (PARR - Free Report) , SilverBow Resources (SBOW - Free Report) and Equinor (EQNR - Free Report) — each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Par Pacific’s 2022 earnings stands at $5.74 per share, which indicates an increase of about 433.7% from the year-ago loss of $1.72.

The consensus mark for PARR’s 2022 earnings has been revised upward three times over the past 60 days from $4.03 to $5.74 per share.

The Zacks Consensus Estimate for SilverBow’s 2022 earnings stands at $8.72 per share, up 35.8% from the year-ago earnings of $6.42.

SBOW beat estimates for earnings in all the trailing four quarters, the average being 36%.

The Zacks Consensus Estimate for Equinor’s 2022 earnings is pegged at $7.37 per share, which implies an increase of about 139.3% from the year-ago earnings of $3.08.

EQNR beat estimates for earnings in all the trailing four quarters, the average being around 10.2%.

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