Marathon Petroleum Norge AS, a wholly owned subsidiary of Marathon Oil Corporation (MRO), announced that it would sell its stake in the production licenses at the Norwegian Continental Shelf to partner and operator Statoil Petroleum AS. The total consideration of the deal is $85 million, with an effective date of January 1, 2011. The deal, pending Norwegian governmental approval, is expected to be completed in the first quarter of 2011.
Under the terms of the agreement, Statoil will acquire Marathon’s 20% interest in the PL 025 – Gudrun field development and PL 187 – Brynhild discovery. Marathon is also selling its 12.5% interest in the Eirin discovery through the production license PL 048E. With this transaction, Statoil Petroleum AS, a 100% owned operating subsidiary of Statoil ASA (STO), increased its holding in the production licenses 025 and 187 to 75% from 55%.
Other than Marathon and Statoil, PL 025 and PL 187 were partly owned by GDF Suez E&P Norge AS, while the third owner of PL 048E is TOTAL E&P Norge AS, an affiliate of Total SA (TOT).
This agreement forms a part of Marathon’s redesigning program intended to balance its asset base with high profit generating projects. We continue to believe that the company’s array of development projects in Gulf of Mexico, Norway and Iraq provides visible production growth over the coming years. The company’s interest in Alvheim, Volund and Vilje developments of Norway will remain unaffected by this sale.
We are maintaining our long-term Neutral recommendation on the stock. Marathon currently retains a Zacks #3 Rank (short-term Hold rating)
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