Marathon Oil Mulls Selling Libya Oil Stake

By
• BENOIT FAUCON

Marathon Oil Corp. MRO -0.03% has notified Libya's National Oil Co. that it is considering selling its stake in Libya's largest foreign-oil partnership, two Libyan oil officials said. Recently, the U.S. company has increased its focus on the growth potential of its shale assets at home.
On behalf of the government, Libya's National Oil is reviewing whether to allow the sale process to proceed but hasn't yet decided what to do, the oil officials said.
A Marathon withdrawal from Libya would widen the effects on African oil-producing nations of the U.S. shale boom. U.S. oil imports from Nigeria, Algeria and Angola have dropped sharply in recent months as American oil production has displaced Africa's similar-quality light crudes. Marathon's departure would also mark the exit from a risky asset. The company stuck with the oil venture after Libya's civil war and the lingering instability.
In a back-of-the-envelope calculation, one Libyan oil official said that a divestment such as the one sought by Marathon could fetch $2 billion to $3 billion.
The company's Eagle Ford, Bakken and Oklahoma shale interests in the U.S. "form the core of Marathon Oil's growth assets," its website says. "We expect these assets to account for more than 36% of our total global production by 2016, up from 21% in 2013."
Marathon's net production from the three shale assets grew to about 109,600 barrels a day on average in December 2012, compared with 41,500 barrels a day in December 2011, according to company data released in February.
A Marathon spokeswoman declined to comment on the company's plans in Libya, saying, "We don't comment on rumors."
Marathon was among the first exploration and production companies of its kind to recognize the advantages of oil from shale fields, which have led to a resurgence in U.S. oil production by applying hydraulic fracturing techniques first used in natural gas fields. The company has transformed itself from an integrated oil company heavily focused on international operations to an independent exploration and production company with output boosted by its focus on U.S. oil from shale.
Marathon owns a 16.3% stake in the concessions of Libya's Waha Oil Co. consortium, the country's largest foreign partnership with production of 350,000 barrels a day. ConocoPhillips COP +0.18% holds 16.3%, Hess Corp. HES +1.25% has 8.2% and Libya's National Oil Co. holds the rest.
Libyan Deputy Oil Minister Omar Shakmak said the National Oil Co. would have a preferential right to buy Marathon's stake in the Libyan oil concessions.
Lured by highly prized light oil reserves, the three U.S. oil companies in the Waha consortium returned to Libya in 2005 after the lifting of international economic sanctions imposed on the regime of strongman Moammar Gadhafi. The sanctions were connected to the deadly bombing in 1988 of Pan Am flight 103 over Lockerbie, Scotland.
Marathon later remained in the North African nation despite a civil war that toppled Mr. Gadhafi in 2011 and unrest at oil facilities ever since.
Marathon sold an Angola oil-field stake last month to one of China Petrochemical Corp.'s joint ventures for $1.5 billion.

Marathon's renewed focus on the home front comes as other U.S. oil producers have made similar moves. As previously reported, companies such as Anadarko Petroleum Corp. APC -0.04% and Hess are looking for buyers for all or part of their Asian portfolios, including those in China and Thailand.

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