Marathon Oil spends more than $800 million to acquire a rival with a strong portfolio in the shale oil basins of Oklahoma. File photo by Gary C. Caskey/UPI | License Photo
HOUSTON, June 20 (UPI) -- U.S. oil major Marathon said Monday it spent $888 million to acquire a rival that has a strong portfolio in the shale oil basins of Oklahoma.
Marathon Oil Corp. signed a deal to acquire PayRock Energy Holdings, which held about 61,000 acres of land in the Anadarko shale reserve area in Oklahoma. Marathon Oil President and CEO Lee Tillman said the acquisition "will meaningfully expand the quality and scale of Marathon Oil's existing portfolio in one of the best unconventional oil plays in the United States."
Acreage held by PayRock was in the so-called STACK area of the Anadarko basin. In May, Continental Resources, one of the largest shale players in the United States, said it completed an "industry record well" in the STACK area. Over a 24-hour test, Continental's Verona well flowed 2,345 barrels of oil, which represented about 70 percent of the well's total production. The rest was associated gas.
According to Marathon, PayRock was producing around 9,000 barrels of oil equivalent per day from the STACK area. Total reserves in the area could be in the neighborhood of 330 million barrels of oil equivalent, the company said.
Marathon earlier this year said it expected North American production to be about 4 percent lower during the second quarter, reflecting lower capital investments. Tillman at the time said the company would live within its means for 2016 given the weak market for crude oil.
Total net production for the first quarter of around 388,000 barrels of oil equivalent per day was in line with the upper end of the company's guidance.
Tillman said the company aims to deploy at least four drilling rigs into the new acreage in Oklahoma by next year.