Marathon Oil has announced it is no longer marketing its UK business after agreeing a deal to sell off its Norwegian unit.
Marathon Oil Norge is to be sold to Norway’s Det norske oljeselskap in a US$2.1 billion cash deal. The sale includes the Marathon Oil-operated Alvheim floating production, storage and offloading (FPSO) vessel (pictured), 10 company-operated licenses and a number of non-operated licenses on the Norwegian Continental Shelf in the North Sea. Full-year 2013 net production in Norway averaged about 80,000 boe/d.
“The strategy and vision of Det norske has always been to create a strong Norwegian E&P company. With this transformational transaction we have achieved our goal well ahead of schedule”, said Sverre Skogen, chairman of the Board of Det norske. “We believe that there is still high potential on the Norwegian Continental Shelf and Det norske will remain a pure play NCS company.”
Meanwhile, Marathon said: “After careful consideration of all bids, the company received no acceptable offer for its UK North Sea business and has elected to retain those assets.”
"From the beginning of this marketing process, we stated we would only sell our UK North Sea business if we received an offer that appropriately valued these assets," Lee M. Tillman, Marathon Oil's president and CEO said. "Accordingly, we will continue to operate this business as we always have.”
Det norske deal
After its transaction with Marathon Oil is completed, Det norske will have 202MM boe of 2P reserves, including the operated Ivar Aasen development and a stake in the Johan Sverdrup development project.
Det norske’s CEO Karl Johnny Hersvik said: “The acquisition of Marathon Norway is a big step for Det norske as a company. “Marathon Norway is an excellent fit for Det norske, given the operational expertise, access to cash flow and the production profile it brings. The acquisition is important when it comes to meeting our funding requirements for Ivar Aasen and Johan Sverdrup, and to reducing Det norske’s overall risk profile.”
Identified upside in Marathon’s portfolio is estimated at about 80MM boe. Combined 2013 production for the two companies amounted to approximately 84,000 boe/d, making Det norske one of the largest listed independent E&P companies in Europe in terms of output.
After the acquisition, Det norske will have more than 450 employees. No redundancies are expected as a result of the transaction, said the company.
The cash consideration is based on a gross asset value of US$2.7 billion and is adjusted for debt, net working capital, and interest on the net purchase price. The effective date of the transaction is 1 January 2014 and it is expected to close in Q4 2014, subject to regulatory approvals.
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