Marathon Oil to sell some stakes in Gulf of Mexico

Marathon Oil Corp. is selling its stakes in aging oil-producing fields in the Gulf of Mexico for $205 million, part of an effort to concentrate more of its financial muscle in U.S. shale plays.

The Houston oil producer said Monday it is holding onto minority stakes in two Gulf projects, including the Gunflint project that’s expected to start pulling up its first barrels of oil next year, and its stake in Anadarko Petroleum Corp.’s deep-water Shenandoah discovery.

But Marathon said it has agreed to sell off the Gulf fields it operates, which are in the Ewing Bank blocks, 64 miles off the coast of Louisiana. Oil companies began drilling there more than two decades ago.

The company is also selling two non-operated interests in Gulf fields — Marathon said all the financial obligations tied to abandoning the wells in those fields will be transferred to the buyer, which the company did not disclose. Marathon produced 17,000 barrels a day from its Gulf fields last year.

The transaction, expected to close before the end of the year, is its latest move to reshuffle its corporate priorities.

Marathon last week told investors it would sell off $500 million in noncore assets and has cut its shareholder dividend in a bid to shore up more cash it can use to squeeze oil from lucrative onshore shale plays, primarily in Texas, North Dakota and Oklahoma.

Marathon also informed employees that it will shed 200 jobs this month as it restructures its upstream business into distinct units, one operating its shale assets and the other covering its conventional fields. That round of layoffs will bring its job cuts this year – 640 – to about 19 percent of its workforce.

Analysts at Simmons & Company International said Marathon’s sale price for its Gulf assets — about $14,000 per barrel of oil equivalent — came in well below the average value of 35 similar deals over the last five years, which was about $55,000 per barrel produced. “Obviously (the deal is) in a far different oil price environment,” the Simmons analysts wrote.

Shares in Marathon Oil closed at $18.36 Monday, up 7 cents.