Marathon Oil to buy Permian Basin acreage for $700 million

Marathon Oil Corp. says it will pay $700 million for 21,000 net acres in the Northern Delaware Basin in New Mexico, its second deal in the region in less than two weeks.

The Houston driller said Tuesday the all-cash transaction brings its footprint in the Permian Basin to more than 90,000 net acres. The land deal with private Fort Worth driller Black Mountain Oil & Gas and others is expected to close in the second quarter.

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Oil wells on the property currently pump about 400 barrels of oil equivalent a day, but Marathon estimates the land has some 550 million barrels of oil equivalent in total resource potential, the amount of oil and gas the company believes it can extract profitably.

The company said the acreage has at least six different target layers of oil-soaked rock and 5,000 feet of so-called stacked pay, the area drillers target to harvest oil and gas.

A Marathon Oil drilling rig. (Houston Chronicle)

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Earlier this month, Marathon had announced it would spend $1.1 billion in cash to snap up more than 70,000 net acres in the Permian Basin, as it sold off Canadian oil sands assets for $2.5 billion to Royal Dutch Shell and Canadian Natural Resources.

“We expect to pursue additional trades and grassroots leasing,” Marathon CEO Lee Tillman said in a written statement.

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