U.S. independent energy company
Marathon Oil Corporation
) - through its subsidiary Marathon Ethiopia Limited B.V. - has
agreed to purchase 20% working interest in the South Omo concession
in Ethiopia from an agricultural firm Agriterra Limited.
Per the sale and purchase agreement, Agriterra will receive net
proceeds of $40 million from Marathon. An additional payment of $10
million will also be made by Marathon upon a commercial discovery.
The acreage spreads over an area of 7.2 million gross acres in the
East African country. In the South Omo region, an exploration well
is expected to be drilled in the fourth quarter of 2012.
London-based Tullow Oil controls 50% stake in the South Omo block
and acts as an operator, while Africa Oil operates with the
remaining 30% interest.
Following the necessary approvals from the Ethiopian authority, the
transaction will likely be closed by the end of 2012.
Management of Marathon believes that this deal will add to its
portfolio of ventures in the East Africa and open doors to more
opportunities in the coming days.
Marathon - which last year spun off its refining/sales business
into a separate, independent and publicly traded company
Marathon Petroleum Corporation
) - currently retains a Zacks #3 Rank (short-term Hold rating). We
also maintain our long-term Neutral recommendation on the shares.
We believe that Marathon - with its large and
geographically-diverse reserve base and solid project pipeline -
reflects impressive growth prospects and outlook. We also like the
company's healthy balance sheet, which helps it to capitalize on
strategic acquisitions and investment options.
Marathon's emphasis on the high-margin North American
unconventional resource plays will further add to its efforts in
developing a robust business model.
However, we believe that upside potential will remain limited until
Marathon has fully reaped the benefits of the spin-off.
MARATHON PETROL (MPC): Free Stock Analysis
MARATHON OIL CP (MRO): Free Stock Analysis
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