Marathon Oil to acquire PayRock Energy for $888m

Marathon Oil has signed an agreement to acquire US-based PayRock Energy from EnCap Investments in a transaction valued at $888m.

At present, PayRock has about 61,000 net surface acres and existing production of 9,000 net barrels of oil equivalent per day (boed) in the oil window of the Anadarko Basin Stack play in Oklahoma.

Marathon Oil president and CEO Lee Tillman said: "Acquiring PayRock’s Stack position will meaningfully expand the quality and scale of Marathon Oil’s existing portfolio in one of the best unconventional oil plays in the US.

"The recent moves we’ve taken to strengthen the company’s balance sheet, including the successful execution above the top end of our non-core asset divestiture target, have positioned us to be opportunistic to acquire what is an excellent strategic fit."

Marathon expects the capital programme for this year on the acquired acreage to be covered within its current budget of $1.4bn.

"As we look into 2017, we would anticipate a minimum four-rig drilling programme in our pro forma STACK position, which will achieve leasehold drilling requirements while accelerating delineation work," Tillman added.

The acquisition will give 330 million boe 2P resource with 490 gross company operated locations for Marathon.

In addition, the company will receive 700 million boe total resource potential from increased well density in Meramec and Woodford and Osage development.

Subject to customary closing conditions, the transaction is expected to close in the third quarter of this year.