Marathon Oil plans to buy Western Oil for $5.5B

0 Comments | Deseret News (Salt Lake City), Aug 1, 2007

HOUSTON (AP) -- Marathon Oil Corp. is poised to break into Canada's growing oil-sands market, announcing Tuesday it has agreed to buy Western Oil Sands Inc. for $5.5 billion in cash and stock.

Marathon also said its second-quarter earnings fell 11 percent from a year ago, when it benefited from a one-time gain.

Shareholders of Western Oil, based in Calgary, Alberta, will get $3.6 billion in cash and $1.9 billion in Marathon stock. Marathon also will assume $650 million in Western Oil debt, valuing the total deal at roughly $6.2 billion.

As part of the agreement, Western is required to spin off WesternZagros, its wholly-owned subsidiary with interests in Kurdistan, before the transaction closes. The deal is expected to close in the fourth quarter of this year.

Marathon said the deal gives it a 20 percent interest in the Athabasca Oil Sands Project in Alberta currently held by Western Oil. Shell Canada Ltd. and Chevron Canada Ltd. hold the remaining 60 percent and 20 percent stakes, respectively.