Marathon Oil said it will pay $3.5 billion to acquire oil assets in the Eagle Ford Shale in South Texas that are partially owned by private-equity firm Kohlberg Kravis Roberts. KKR's share of the transaction will be valued at about $1.13 billion and Hilcorp Energy Corp. will receive the remaining proceeds, according to the Wall Street Journal.
The deal is scheduled to close in the fourth quarter. Texas-based Marathon (MRO) will gain 36 wells currently producing about 7,000 barrels of oil equivalent per day. The acquisition also includes 10 more wells to be completed and six rigs, the Journal reported.
The acquisition boosts Marathon's Eagle Ford acreage to 155,000. At a price tag of $3.5 billion, Marathon paid about $25,000 per acre, marking one of the highest prices paid to date acquire Eagle Ford assets. Marathon is not expecting an increase to its 2011 budget as a result of the acquisition.
The company expects to buy enough additional acreage in the Eagle Ford region to bring its holdings there to 285,000 acres by the end of 2011, more than doubling its current holdings there, the Journal reported, citing Marathon.