Exploration and production company Marathon Oil has announced it will buy natural gas-focused assets from Ensign Natural Resources in a $3 billion cash deal. The transaction will double Marathon’s position in the Eagle Ford shale basin of South Texas.
Elevated oil and gas prices caused by Russia’s invasion of Ukraine and the subsequent market disruption have bestowed energy producers with huge gains. The influx of cash has allowed for purchases such as Marathon’s, as well as the rewarding of shareholders and repaying of debt.
Marathon’s third-quarter profit jumped in November, boosting its expected cash flow for 2023 by 15%. It will raise its base dividend by 11% after the acquisition closes at the end of 2022.
The deal strikes "the right balance between immediate cash flow accretion and future development opportunity," with additional benefits coming from Marathon's existing Eagle Ford position’s proximity to Ensign's acreage, Marathon Chairman, President, and CEO Lee Tillman said in a statement.
Ensign, which was formed in 2017 with capital from Warburg Pincus, owns and operates 130,000 net acres, producing an estimated 67,000 barrels of oil equivalent per day (BOE/D), making it one of the largest private operators in the basin.
"Over the past four years, Ensign has become one of the largest producers in the Eagle Ford basin, operating more high-quality drilling inventory than nearly all other private operations in the basin, with strong drilling results. I am proud of what we have built at Ensign and for the dedication and hard work of our employees," Brett Pennington, Ensign’s President and CEO, said in a statement.
The transaction is expected to close by the end of 2022, pending customary regulatory approvals.