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Marathon Oil Selling Non-Core Assets For $950 Million

Marathon Oil Corp. has agreed to sell non-core assets in northwest Wyoming, Colorado, West Texas and the offshore Gulf of Mexico (GOM) for $950 million, bringing the total value of the company’s divestitures since last year to about $1.3 billion.

On Monday, Houston-based Marathon said that in the largest transaction, it will shed all of its upstream and midstream assets in Wyoming for $870 million, excluding closing adjustments. The company's upstream assets are primarily waterflood developments in the Big Horn and Wind River basins, which averaged 16,500 boe/d of production in 1Q2016.

Marathon said it will also sell its 570-mile Red Butte crude oil pipeline. According to the company's most recent 10-K filing with the U.S. Securities and Exchange Commission, the pipeline "connects oil fields in the Big Horn Basin to both the Silvertip Station on the Montana-Wyoming state line and to alternate outlets in Casper, WY." Marathon added on Monday that Red Butte is "the only export line in the area."

Although Marathon did not disclose the buyer of its Wyoming assets, Megan Cuddihy, vice president for investor relations at Dallas-based Merit Energy Co., confirmed to NGI's Shale Daily on Tuesday that Merit was the buyer. According to Merit's website, the privately-held company owns an interest in more than 10,000 wells in 10 states with daily production of 64,000 boe/d.

Marathon said it expects to close on the sale of its Wyoming assets by mid-2016, with an effective date of Jan. 1, 2016.

In separate transactions with other undisclosed buyers, Marathon said it has also signed agreements to sell its 10% working interest (WI) in the outside-operated Shenandoah discovery in the GOM (see Daily GPIMarch 22, 2013); operated natural gas assets in the Piceance Basin in Colorado (see Daily GPIJuly 21, 2006); and certain undeveloped acreage in West Texas for a combined total of approximately $80 million. Cuddihy said Merit is not purchasing these assets.

Last February, Marathon cut its budget for capital expenditures (capex) for 2016 in half, compared to the previous year. It also announced a goal of generating between $750 million and $1 billion from the sale of non-core assets in 2016, after targeting $500 million in such divestitures in 2015 (see Shale DailyFeb. 19).

"Ongoing portfolio management continues to drive the simplification and concentration of our portfolio to lower risk, higher return U.S. resource plays and support our 2016 objective of balance sheet protection," Marathon CEO Lee Tillman said.

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