Marathon sells interest in Yates field to Kinder Morgan Energy Partners
Posted: 30 October 2003
Marathon Oil Corporation, through its wholly owned subsidiary,
Marathon Oil Company, announced today that it has entered into purchase
and sale agreements with Kinder Morgan Energy Partners, L.P. under
which Marathon will sell its 42.45 per cent working interest in
the Yates field unit and its 100 per cent interest in the Yates
Gathering System in the Permian Basin of West Texas for $225.5 million.
The companies expect to close the transaction in November.
Upon closing, this transaction will result in a cash benefit to
Marathon of approximately $390 million due to the company's tax
basis in the underlying assets.
This transaction follows actions announced earlier this year by
Marathon and Kinder Morgan when the companies dissolved MKM Partners
L.P. (and a related company, MKM Holdings LLC), and Kinder Morgan
acquired MKM Partners' 12.75 per cent interest in the SACROC field.
Additionally, Marathon and Kinder Morgan signed a letter agreement
under which Kinder Morgan would acquire Marathon's indirect, wholly
owned subsidiary, Marathon Carbon Dioxide Transportation Company,
which owns a 65 per cent interest in The Pecos Carbon Dioxide Pipeline
Company.
The sale of Marathon Carbon Dioxide Transportation Company for
approximately $2 million also is expected to close in November.
The Yates field was discovered in 1926 and has produced nearly
1.5 billion barrels of oil. The field currently has more than 360
active producing wells and covers a unitized area of approximately
26,400 acres or almost 41 square miles.
Marathon's net share of current Yates production is approximately
7,500 barrels per day. The company's proved reserves associated
with the Yates field total 175 million barrels of oil equivalent.
The Yates Gathering System consists of approximately 87 miles of
pipeline ranging from two to 12 inches in diameter that gathers
production and transports it to central tank batteries for shipment
to markets.
With the completed sale of Marathon's interest in the Yates field
and Yates Gathering System, the company will have sold approximately
$1.2 billion in assets this year as part of a program to sell non-core
assets.
Proceeds from these sales are being used to strengthen Marathon's
balance sheet and to invest in high value business opportunities
such as the company's purchase of Khanty Mansiysk Oil Corporation
earlier this year.
This news release contains forward-looking statements concerning
asset dispositions and investment in other business opportunities.
Some factors that could affect the disposition of interests in the
Yates field, the Yates Gathering System and Marathon Carbon Dioxide
Transportation Company include customary closing conditions.
For more information see http://www.marathon.com.
Posted by Richard Price,
Editor Pipeline Magazine
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