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Marathon Oil Sells Canadian Properties, Buys Permian Assets
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In order to focus on more profitable resources, energy major Marathon Oil Corporation (MRO - Free Report) recently announced its decision to rebalance its portfolio by selling its Canadian oil sands business and acquiring acres of land from Permian Basin.
Divests Canadian Business
As part of the announcement, Marathon Oil declared its intention to divest its Canadian affiliate to Royal Dutch Shell plc and Canadian Natural Resources Limited (CNQ - Free Report) for a cash consideration of $2.5 billion. The agreement is expected to complete by mid-2017.
Notably, Marathon Oil’s Canadian subsidiary has 20% non-operated interest in the Athabasca Oil Sands Development.
Acquires Permian Acres
Alongside selling Canadian properties, Marathon Oil intends to acquire 70,000 net acres of area from the Permian basin from BC Operating Inc. and other entities. The value of the deal, which is likely to be closed by the second quarter 2017, is $1.1 billion in cash.
The properties to be purchased cover 51,500 acres of land in the Northern Delaware basin of New Mexico. Production from the acres currently amount to 5,000 net barrels of oil equivalent per day (BoE/D).
Benefits of the Deal
Management believes that the divestment of properties in Canada at such an attractive price as well as the company’s growing exposure to the lucrative U.S. resource plays will boost its prospects. In fact, the agreements have positioned the company to generate significant cashflows over the long term.
Price Performance
Marathon Oil has showed considerable pricing strength over the last one year. During the aforesaid period, the company’s shares gained almost 52% compared with 0.1% increase for the Zacks categorized Oil & Gas-U.S Integrated industry.
About the Company
Houston, TX-based Marathon Oil is a leading upstream energy player. The company’s earnings beat the Zacks Consensus Estimate in each of the last four quarters with an average positive earnings surprise of 19.47%.
However, the company’s dividend yield history is not attractive. The current dividend yield of 1.3% is below the 3.1% yield for the industry and 2.1% yield of Hess Corporation (HES - Free Report) . The company’s average yield of 1.4% also underperformed the dividend yield of almost 3% for the broader industry over the last one year.
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Marathon Oil Sells Canadian Properties, Buys Permian Assets
In order to focus on more profitable resources, energy major Marathon Oil Corporation (MRO - Free Report) recently announced its decision to rebalance its portfolio by selling its Canadian oil sands business and acquiring acres of land from Permian Basin.
Divests Canadian Business
As part of the announcement, Marathon Oil declared its intention to divest its Canadian affiliate to Royal Dutch Shell plc and Canadian Natural Resources Limited (CNQ - Free Report) for a cash consideration of $2.5 billion. The agreement is expected to complete by mid-2017.
Notably, Marathon Oil’s Canadian subsidiary has 20% non-operated interest in the Athabasca Oil Sands Development.
Acquires Permian Acres
Alongside selling Canadian properties, Marathon Oil intends to acquire 70,000 net acres of area from the Permian basin from BC Operating Inc. and other entities. The value of the deal, which is likely to be closed by the second quarter 2017, is $1.1 billion in cash.
The properties to be purchased cover 51,500 acres of land in the Northern Delaware basin of New Mexico. Production from the acres currently amount to 5,000 net barrels of oil equivalent per day (BoE/D).
Benefits of the Deal
Management believes that the divestment of properties in Canada at such an attractive price as well as the company’s growing exposure to the lucrative U.S. resource plays will boost its prospects. In fact, the agreements have positioned the company to generate significant cashflows over the long term.
Price Performance
Marathon Oil has showed considerable pricing strength over the last one year. During the aforesaid period, the company’s shares gained almost 52% compared with 0.1% increase for the Zacks categorized Oil & Gas-U.S Integrated industry.
About the Company
Houston, TX-based Marathon Oil is a leading upstream energy player. The company’s earnings beat the Zacks Consensus Estimate in each of the last four quarters with an average positive earnings surprise of 19.47%.
However, the company’s dividend yield history is not attractive. The current dividend yield of 1.3% is below the 3.1% yield for the industry and 2.1% yield of Hess Corporation (HES - Free Report) . The company’s average yield of 1.4% also underperformed the dividend yield of almost 3% for the broader industry over the last one year.
Zacks Rank
Marathon Oil carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>