02-11-01 Marathon Oil will pay $ 993 mm cash to buy oil and gas fields and processing plants in Equatorial Guinea from CMS Energy, the companies said. The deal will increase the company's worldwide reserves by 20 %, or 250 mm boe. This will add a new country to Marathon's West Africa holdings, doubling its output in this rich region. The Houston-based oil company already has interests in the offshore waters of Gabon and Angola.

Marathon Oil is still part of USX-Marathon Group but will soon be split off from USX's steel business, which will go into a publicly traded company to be called United States Steel. The remaining energy business will continue to be operated by USX. Analysts generally applauded the West Africa deal.
"They are sprucing up their portfolio in a very positive way," said Fadel Gheit, energy analyst with Fahnestock & Co. in New York. "It is a very promising part of the world. West Africa is where the action is."

Marathon expects the purchase to boost its global daily production bythe equivalent of 18,000 bpd of oil, or 4.3 %, in 2002 and by an additional 17,000 to 22,000 barrels bpd in 2004. The company produced 420,000 bpd of oil in 2000.
Based on a reserve estimate of 250 mm barrels of oil, Marathon paid $ 3.97 per barrel, the company said. Marathon said it plans to spend another $ 327 mm to develop the reserves, which would increase the costs to $ 5.28 per barrel, an amount it called "very competitive." "This acquisition will establish a new core business area for Marathon," Clarence Cazalot, Marathon president, said.
He described the deal as a way for the company to increase its integrated gas business, using technologies that will enable it to sell gas that was impossible to market. The deal is expected to close in January.