Marathon Oil and Tullow to aquire stakes in Kenyan blocks

Marathon Oil has said it will acquire an interest in two Kenyan onshore exploration blocks covering more than 11 million gross acres.

As per the agreement with Africa Oil Corporation, Marathon Oil will purchase a 50% interest in Block 9 and a 15% interest in Block 12A.

Africa Oil will maintain operatorship in Block 9, spanning 7.5 million gross acres along a prospective Cretaceous rift trend, but Marathon Oil has the right to assume operatorship if a commercial discovery is made.

Marathon will pay an entry payment of $35m to acquire the two blocks, and has agreed to pay a maximum of $43.5m to fund Africa Oil’s share of future joint venture expenditures over the next three years.

Africa Oil president and CEO Keith Hill said, "The consideration to be received from Marathon Oil will allow us to both accelerate the exploration in the blocks that Marathon Oil is farming into as well as provide additional funding to the Company for the accelerated exploration program on the Tertiary rift trend being executed in partnership with Tullow Oil."

Africa Oil and Marathon Oil have also agreed to jointly pursue exploration activities in Ethiopia following Ethiopian Government approvals.

In a separate transaction, Africa Oil has completed an additional farmout deal with Tullow Oil, which has now secured Kenyan government approval.

Tullow Oil will acquire an additional 15% interest in Block 12A for $750,000 and will also fund Africa Oil’s share of costs related to the acquisition of 520km of 2D seismic worth $3.1m.

In February 2011, Tullow purchased a 50% stake in Block 12A and assumed operatorship of the block.

Going forward, Tullow will own a 65% in Block 12A and Africa Oil and Marathon will own 20% and 15% stake respectively, while Block 9 will be jointly owned by Africa Oil and Marathon, who will each hold a 50% interest.