Energy exploration and production firm
Marathon Oil Corp.
) has confirmed that it has pulled out of talks with potential
buyers regarding the partial sale of its 20% interest in the
Athabasca Oil Sands Project (AOSP) in Alberta, Canada.
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The venture - involved in the extraction of bitumen (a sticky,
tar-like form of petroleum) from sand formations - is a
collaboration between the Canadian subsidiaries of Europe's
largest oil company
Royal Dutch Shell plc
), U.S. energy giant
) and Marathon Oil. Shell has a 60% operated interest in the
project, while the remaining 40% is equally split between the
In an announcement, Marathon Oil revealed that it has ended
discussions with prospective purchasers without reaching any
agreement and is not involved in any further negotiations for
possible stake sale of the said property.
Despite Marathon Oil's inability to secure a deal for its
Canadian oil sands project, the company still plans to generate
$1.5-$3 billion from selling assets - those that do not fit into
its long-term growth plan - over the period 2011-2013. To date,
Marathon Oil has raised roughly $1.3 billion through property
Houston, Texas-based Marathon Oil is a leading energy firm with a
large and geographically-diverse reserve base and solid project
pipeline. Additionally, the company possesses a healthy balance
sheet, which helps it to capitalize on investment opportunities.
We also like the strong growth potential of Marathon Oil's
high-margin liquids-rich unconventional plays, which diversify
its portfolio and are expected to further drive its overall
However, we think the current valuation is fair and adequately
reflects the partnership's future growth prospects. Moreover,
Marathon Oil will take some time to fully absorb the outcome of
the spin-off of its downstream business, which is expected to
further limit its ability to generate positive earnings
This accounts for Marathon Oil's current Zacks Rank #3 (Hold),
implying that it is expected to perform in line with the broader
U.S. equity market over the next one to three months.
Meanwhile, one can look at
TransAtlantic Petroleum Ltd.
) as a good buying opportunity. This U.S. integrated energy firm
- sporting a Zacks Rank #2 (Buy) - have solid secular growth
stories with potential to rise from current levels.