Oppenheimer Reports Marathon Oil Acquisition

According to Oppenheimer, Marathon Oil MRO yesterday announced the acquisition of 141K acres in the Eagle Ford shale with estimated resource potential of 470 mmboe for $3.5B. Oppenheimer said that this transaction is expected to close in November, and should more than double MRO's position in this prolific play to 285K acres. “At ~$25,000/acre, the transaction seems expensive, but based on the estimated resource potential, the average finding cost is $8/boe. Combined with development costs of $13/boe ($8M well cost and 600 mboe EUR), the $21/boe F&D costs are in line with the industry average. The transaction could add 100 mmboe to MRO reserves this year and will be immediately accretive to per share earnings and cash flow and will boost production CAGR to 5-7% from 2-3%.” Marathon Oil closed yesterday at $52.65.