By Dominic Chopping and Kjetil Malkenes Hovland
Marathon Oil Corp. is selling its Norwegian business for more
than $2 billion in cash to Det Norske Oljeselskap ASA as part of a
drive by the Houston-based energy company to sell its North Sea
oil-and-gas operations to focus on the U.S.
"The sale of our Norway assets advances one of our key 2014
priorities and further demonstrates our commitment to rigorous
portfolio management to simplify and concentrate our business,"
Marathon Chief Executive Lee M. Tillman said Monday.
In December the company said it would increase in capital
spending to boost output while also lifting shareholder returns
with a $2.5 billion buyback program.
Marathon said the Norwegian deal was worth $2.7 billion but that
after adjustments for debt, net working capital and interest the
net proceeds would be $2.1 billion.
Since 2011 Marathon Oil has sold $6.2 billion worth of assets in
a bid to improve growth and profitability. It said cash from the
Norway deal will be used to promote organic growth and to fund its
share buybacks.
However, the company said it had abandoned plans to sell its
U.K. North Sea business after failing to attract an acceptable
offer.
"Accordingly, we will continue to operate this business as we
always have, with a focus on our company's long-held values and
commitment to safe and responsible operations," Mr. Tillman
said.
For Det Norske Oljeselskap, the acquisition will allow it to
bolster capacity as it prepares for production at the massive North
Sea field Johan Sverdrup.
The Norwegian company said it expects the deal to be completed
in the fourth quarter of 2014, with the plan for development and
operation of the Johan Sverdrup field scheduled for submission in
February 2015.
"It's a good match," Det norske oljeselskap Chief Executive Karl
Johnny Hersvik told The Wall Street Journal. "It provides a basis
for a long-term financing solution and a great platform for future
growth."
If the Marathon portfolio had been included in 2013, Det norske
oljeselskap would have been the eighth-biggest producer in Norway,
following state-controlled companies Statoil and Petoro and oil
majors Exxon, Total, Shell, Conoco and Eni, according to oil data
firm Rystad Energy.
The deal will be funded with a fully underwritten loan and the
company also plans to strengthen its finances with a $500 million
rights issue, details of which will be announced in mid-July, it
said.
J.P. Morgan Limited acted as financial adviser to Det Norske on
the transaction.
Write to Dominic Chopping at dominic.chopping@wsj.com and Kjetil
Malkenes Hovland at kjetilmalkenes.hovland@wsj.com
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