Marathon Closes $3B Eagle Ford Buy From Ensign

Marathon Oil Corp. has completed its acquisition of Ensign Natural Resources’ Eagle Ford assets for $3 billion cash, the company said Dec. 27.

"This acquisition satisfies every element of our disciplined acquisition criteria" said chairman, president, and CEO Lee Tillman. "It's immediately accretive to our key financial metrics, it will drive higher shareholder distributions consistent with our operating cash flow driven Return of Capital framework, it's accretive to our inventory life with attractive locations that immediately compete for capital and it offers truly compelling industrial logic given our existing Eagle Ford footprint and our track record of execution excellence in the play."

The acquisition adds 130,000 net acres (99% operated, 97% working interest) in acreage adjacent to Marathon Oil’s existing Eagle Ford position. Ensign’s estimated fourth-quarter production will average 67,000 net boe/d, including 22,000 net bbl/d of oil, Marathon said.

Marathon announced the acquisition on Nov. 2, following Devon Energy Corp.’s purchase of Validus Energy for $1.8 billion. 

Those deals and the impending sale of Chesapeake Energy Corp.’s Eagle Ford assets has put the mature shale play back into the spotlight after years in which the Permian Basin has taken center stage for M&A.

Analysts and dealmakers have said the Eagle Ford appears to be an area of focus for companies seeking to add inventory. Others are getting out.

Chesapeake, with its pivot to natural gas, has been marketing its Eagle Ford position, which is expected to command $4.6 billion to $5.9 billion in value, according to a July Enverus estimate.

Other companies, such as BlackBrush Oil & Gas LLC, GulfTex Energy LLC and 1776 Energy Operators LLC also have the potential to lure buyers.

The assets acquired from Ensign span Live Oak, Bee, Karnes and Dewitt Counties across the condensate, wet gas and dry gas phase windows of the Eagle Ford.

Marathon Oil said the company can deliver maintenance-level production from the acquired asset of 67 net boe/d (22 net bbl/d of oil) with approximately one rig and 35 to 40 wells to sales per year.

The company's valuation of the asset does not include any assumptions for synergies or upside redevelopment opportunities.

Based in Houston, Ensign was formed in 2017 in partnership with Warburg Pincus, a global growth investor. The company also secured an equity commitment from the Kayne Private Energy Income Funds platform in 2019 as part of an acquisition of Pioneer Natural Resources Co.’s Eagle Ford assets.