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Marathon Oil Aims To Exit North Sea As It Focuses On U.S. Shale

Marathon Oil launched this week the sale of its oil and gas assets in the UK North Sea, Reuters reported on Wednesday, quoting a sales document it had seen, in what could become the latest U.S. oil firm seeking to exit the North Sea to focus on the American shale plays.

Marathon Oil is selling its minority stakes in the Foinaven fields in the west of Shetland area operated by BP and interests in the Brae complex northeast of Aberdeen in a sales process run by Jefferies. Bids are expected by December this year, according to the document that Reuters has seen.

According to banking sources, Marathon Oil’s assets in the UK North Sea could fetch up to US$200 million. 

Marathon Oil holds interests in the Foinaven fields, in the SAGE pipeline, and continues the planning for the decommissioning of the Brae Area facilities in the UK sector of the central North Sea.

Marathon Oil’s assets in the North Sea produce a total of 15,000 barrels of oil equivalent per day, and the resource base is of 31 million barrels. The assets are expected to yield US$85 million in cash flow next year, according to the sales document that Reuters has seen.

Although the assets and the price tag are not exceptionally significant, the potential pullout of Marathon Oil from the UK North Sea would fit in the company’s strategy to focus on its high-value high-margin U.S. shale assets.

“Portfolio management is an ongoing and integral element of our successful business model as we continue to simplify and concentrate our portfolio to our highest return opportunities with a focus on our differentiated position in the U.S. resource plays,” Marathon Oil’s spokeswoman Lee Warren told Reuters, declining to comment directly on the sale process.

In March this year, Marathon Oil sold its 16.33 percent non-operated interest in the Waha concessions in Libya to France’s Total for US$450 million, with which the U.S. company exited Libya.

“Today’s announcement to divest Libya at an attractive valuation continues the simplification and concentration of our portfolio to the high margin, high return U.S. resource plays,” Lee Tillman, Marathon Oil president and CEO, said in March.

The company has allocated more than 90 percent of its 2018 development capital to the U.S. resource plays in which it has positions—the Permian, the Eagle Ford, the STACK/SCOOP, and the Bakken.

By Tsvetana Paraskova for Oilprice.com

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