Marathon Oil Corporation announced it has entered into a definitive purchase agreement to acquire the Eagle Ford assets of Ensign Natural Resources for total cash consideration of $3.0 billion.
The transaction is subject to customary terms and conditions, including closing adjustments, and is expected to close by year-end 2022.
- Immediate double-digit accretion to key financial metrics and shareholder distributions consistent with Return of Capital Framework; anticipate raising base dividend an additional 11% post-close
- Adds significant high return, high working interest inventory that immediately competes for capital and is accretive to Marathon Oil inventory life
- Compelling industrial logic that significantly increases Eagle Ford scale by nearly doubling Marathon Oil's Basin position with high working interest acreage adjacent to the Company's legacy position
- Executing transaction while maintaining low leverage and investment grade balance sheet
"This acquisition in the core of the Eagle Ford satisfies every element of our exacting acquisition criteria, uniquely striking the right balance between immediate cash flow accretion and future development opportunity," said chairman, president, and CEO Lee Tillman. "The transaction is immediately accretive to our key financial metrics; it will drive higher distributions to our shareholders consistent with our operating cash flow driven Return of Capital Framework; it's accretive to our inventory life with high rate-of-return locations that immediately compete for capital; and it offers compelling industrial logic by nearly doubling our position in a Basin where we have a tremendous track record of execution excellence. Importantly, we expect to execute this transaction while maintaining our investment grade balance sheet and while still delivering on our aggressive return of capital objectives in 2022 and beyond."
The 130,000 net acres (99% operated, 97% working interest) Marathon Oil is acquiring from Ensign Natural Resources span Live Oak, Bee, Karnes, and Dewitt Counties across the condensate, wet gas, and dry gas phase windows of the Eagle Ford.
Estimated fourth quarter 2022 oil equivalent production is 67,000 net boed (22,000 net bopd of oil). Marathon Oil believes it can hold fourth quarter production flat with approximately 1 rig and 35 to 40 wells to sales per year.
The company's valuation of the asset was based off this maintenance level program and does not include any synergy credits or upside redevelopment opportunity. The transaction is expected to close by year-end 2022 with an effective date of Oct. 1, 2022. Acquired tangible assets are eligible for full expensing for the purpose of income tax optimization.
