Japan’s giant trading house Marubeni Corp. last week struck a $270 million deal to acquire a chunk of Marathon Oil Corp.’s gas-rich acreage in the Denver-Julesburg (DJ) Basin.

The agreement with subsidiary Marubeni Denver Julesburg is expected to be completed by the end of the month. Once completed the Japanese company would control an undivided working interest in about 60,000 of the total 180,000 net acres, which values the leasehold at about $5,000 an acre. Marathon would continue to operate the leasehold.

The partnership allows Marathon to “explore and evaluate the full potential of this emerging, liquids-rich resource play,” said Marathon’s Dave Roberts, executive vice president, Upstream. “Our significant acreage position in the DJ Basin reinforces our strategy of targeting unconventional, oil-focused resource plays in the U.S. that provide low-risk, scalable growth opportunities. It also allows us to apply expertise developed over the past several years in other unconventional shale plays, such as the Bakken formation in North Dakota.”

For Marubeni, the transaction gives it a position in a huge U.S. unconventional play, something officials said they have been pursuing since 2009.

“We believe this project [with Marathon] is not only in line with our long-term business strategy but also contributes [to] the recent U.S. energy policy, which is aiming to increase domestic crude oil production,” Marubeni stated.

The massive DJ Basin, which stretches from southeast Wyoming into northern Colorado, holds the emerging Niobrara Shale. The basin has long been a workhorse for oil and gas operators. Abundant gas reserves are held in the eastern portion of the basin, which includes the Wattenberg Field. Today producers also are pouring money into the Niobrara formation, a liquids-rich play that extends from northeastern Colorado into parts of adjacent Wyoming, Nebraska and Kansas.

Anadarko Petroleum Corp. holds the largest position in the basin with close to 550,000 net acres. Other large positions are held by Noble Energy Corp. (430,000 net acres), EOG Resources Corp. (300,000 net acres) and Chesapeake Energy Corp. (an estimated 220,000 net acres).

Last October a U.S. subsidiary of Itochu Corp., one of Japan’s largest oil and gas producers, agreed to buy around 88,000 acres of Niobrara mineral leases in Wyoming from Denver-based Fidelity Exploration & Production Co., a subsidiary of MDU Resources Group Inc. Terms of the transaction weren’t disclosed, but Itochu said at the time its estimated share of development costs would be around $390 million.

Houston-based Marathon, which is the fourth largest integrated producer in the United States, began leasing acreage in the DJ Basin in 2010. It currently is acquiring 2-D and 3-D seismic data and expects to participate in eight to 12 gross exploration wells by the end of the year.

Marathon and Marubeni already are partners in the deepwater Ozona discovery in the Gulf of Mexico (GOM), which had been scheduled to ramp up this year (see NGI, Oct. 31, 2008). A unit of Marubeni last year also paid $650 million for BP plc’s stakes in four deepwater fields in the GOM (see NGI, Nov. 1, 2010).

Canaccord Genuity analysts John Gerdes and Cameron Horwitz noted that the transaction price was “slightly above” the $4,750/acre price that Chesapeake Energy Corp. received from China National Offshore Oil Corp. Ltd. in February, a deal in which the Chinese national gained a one-third interest in 800,000 net acres across portions of the basin, including the Niobrara Shale (see NGI, Feb. 7).

Analysts with Tudor, Pickering, Holt & Co. Inc. (TPH) also weighed in, noting that the transaction would give Marathon a return of more than three times its $1,500/acre acquisition cost; the producer acquired the acreage less than a year ago.

“Acreage located in areas with few Niobrara wells (even vertical) says supply tight and buyers betting on the come,” said the TPH team. Marathon’s “acreage ring fences most Niobrara activity to date in the DJ Basin north of Wattenberg.” The Wattenberg Field, a basin-centered field north of Denver, is considered one of the largest natural gas deposits in the United States. The field has produced more than 4 Tcf of gas.

TPH analysts said they were “cautious to assign $5,000/acre to smaller positions” in the DJ Basin, “as scale matters to buyers” and the Chesapeake and Marathon deals “were both sizeable. But for larger players [we] think a read-through [is] justified.”

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