Marathon Oil may sell stake in deepwater Gulf assets

Marathon Oil Corp. is evaluating the possible sale of a minority stake in its deepwater Gulf of Mexico assets as the company, which recently spun off its refining arm, seeks to boost shareholder returns and strengthen its portfolio, a spokeswoman with the Houston oil company said today.

“Consistent with this plan, and given the significant prospect inventory we’ve built in the Gulf and our focus on capital discipline, we are evaluating the opportunity to farm down a minority working interest in our Gulf of Mexico portfolio,” Marathon’s Lee Warren said in an e-mailed statement.

She did not say how far along the company is in that process, nor specify if all or only some of the company’s deepwater Gulf assets are in play.

In late June, Marathon Oil completed the spin-off of its oil refining and marketing business, which relaunched as the nation’s fifth-largest refiner under the name Marathon Petroleum Corp, with headquarters in Ohio.

Before the split became final, Marathon signaled its aim to be a bigger player in the unconventional oil and gas business onshore, with a $3.5 billion deal to double its acreage in the Eagle Ford shale formation in South Texas.

But Warren said the Gulf of Mexico “remains an important part of our portfolio.”

In the deepwater Gulf, Marathon has significant interests in seven producing fields, of which it operates four. In addition, the company says it has rebuilt its inventory of prospects for future exploration.

Marathon now has 21 prospects with total resources of roughly 1 billion barrels of oil equivalent in the deepwater Gulf, according to a recent presentation by Marathon CEO Clarence Cazalot at a conference hosted by Barclays investment bank. The company has average working interest of 50 percent in each of the prospects and is the operator of 14 of them, he said.

However, development costs are high in the technically challenging region. Some operators have also expressed concern that costs will increase further as they incorporate new safety and environmental regulations enacted after the BP oil spill last year.