Marathon Oil to Sell $2.1B Norway Biz

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Oil and natural gas exploration and production firm, Marathon Oil Corp. (MRO) has signed a definitive contract with Det norske oljeselskap ASA to sell its Norway operations. Marathon Oil will likely receive $2.1 billion in net proceeds − after adjusting debt, net working capital and interest on purchase price − from the Norway-based energy firm which is involved in upstream operations. The deal is slated for a fourth quarter closure, subject to regulatory approvals.  

The divestiture favors Marathon Oil’s long-term growth plans in which its Norway assets do not fit. Marathon Oil added that the to-be sold Norwegian properties contributed roughly 80,000 barrels of oil equivalent (BOE) every day to its total output in 2013.

In Jul 2011, Marathon Oil completed the spin-off of its refining/sales business into a separate, independent and publicly traded company Marathon Petroleum Corp. (MPC). Since then, Marathon Oil has sold approximately $6.2 billion worth of non-core oil and gas properties around the world, thereby freeing up capital to concentrate on its long-term high-grade prospects.

Marathon Oil revealed that the expected proceeds from the latest deal will be spent on two purposes. The major portion is anticipated to be allocated toward the company’s strong inventory of development projects (in three profitable resource plays in U.S). The remaining part will be spent on repurchasing shares under its residual $1.5 billion buyback program and also for normal corporate activities.

Marathon Oil also announced that it has decided to retain its North Sea business, as it hasn’t received any bid that optimally values the properties.

Houston, TX-based Marathon Oil currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at better-ranked players in the energy sector like Ultra Petroleum Corp. (UPL) and Talisman Energy Inc. (TLM). Both stocks sport a Zacks Rank #1 (Strong Buy).

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