Marathon Oil (NYSE:MRO) has inked a deal to buy Hilcorp Resources’ assets in the core of the Eagle Ford shale formation in Texas for $3.5 billion.
The new positions will more than double Marathon’s Eagle Ford acreage to 285,000 net acres. It brings the company’s holdings across North American liquids-rich resource plays to nearly one million.
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Including the six drilling rigs currently under contract with this acquisition, two in Marathon’s other Eagle Ford acreage and five on order, the company said it expects to be operating at least 20 rigs in the Eagle Ford within a year of closing the deal, amounting to a peak of about 100,000 net barrels of oil equivalent a day by 2016.
Marathon said it has captured a top-five acreage position in the core of the Eagle Ford since first entering the area in November. The latest deal will further assist Marathon in increasing its projected upstream production growth in the range of 5% to 7% on a compound average annual growth rate from 2010 to 2016.
“This transaction enhances our already strong North America position focused on unconventional, liquids-rich resource plays that provide low-risk, scalable and profitable growth,” Marathon CEO Clarence Cazalot said in a statement.
The deal, slated to close in November, remains subject to adjustments, customary closing conditions and Hart-Scott-Rodino approval. The company said it will use cash on hand generated from operations to fund the transaction.