Marathon Oil Corp. said Tuesday it is soliciting offers for subsidiary Pennaco Energy Inc.’s extensive coalbed methane (CBM) assets in the Powder River Basin of Wyoming and Montana. The producer paid $500 million for the Denver-based company in 2000 (see Daily GPI, Dec. 27, 2000).

The bidding process will conclude in the third quarter, and Marathon said that if an acceptable offer is received, it expects to close the deal by the end of the year. The sale would not include any of Marathon’s conventional oil and natural gas exploration and production operations in Wyoming or Montana.

When it was bought by Marathon, Pennaco was one of the largest leaseholders in the Powder River play with more than 400,000 net acres, and the deal, in turn, made Marathon the largest CBM acreage holder in the basin, with more than 650,000 net acres in northeast Wyoming and southeast Montana. Although Marathon has a major presence in the basin, it said production from Pennaco operations represented only 10% of its U.S. natural gas production.

Production from the Pennaco operations averaged approximately 72 MMcf/d net during 1Q2004. At year-end 2003, Marathon’s total resource base in the basin exceeded 2 Tcf of natural gas, of which 388 Bcf were booked as proved reserves.

In a statement, the Houston-based producer said its decision to market Pennaco is part of its “ongoing efforts to actively manage its global asset portfolio to ensure alignment with its business strategy and to generate sustainable value growth. This business approach demands that the company continually evaluate the value of existing operations against the value of new or emerging opportunities. Strong natural gas prices and recent sales transactions in the Rocky Mountains indicate that now is the appropriate time to solicit potential offers for these interests.”

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.