Marathon Oil (NYSE: MRO) is bulking up in the Eagle Ford with a 4,800 net acre buy in the core of its south Texas position and cutting ties with its interests in Angola in a deal with a net value of $493 million, the company announced Sept. 10.

Marathon is also moving to repurchase $1 billion of its common stock.

Marathon said its land deals were unrelated. Marathon announced an agreement to sell its 10% working interest in the in Block 32 offshore Angola to Sonangol E.P. for $590 million, excluding any purchase price adjustments. The transaction should close by the fourth quarter of 2013, with an effective date of Jan. 1, 2013.

The Eagle Ford bolt-on purchase of $97 million includes carried interest of about $23 million, Marathon said. At year-end, the company held 330,000 net acres in the Eagle Ford, with an average working interest of 80%. About 230,000 acres are in the core of the play.

Marathon’s decision to add on to its core Eagle Ford acreage is not surprising, though it comes at a high price, said Pearce Hammond, managing director and co-head of E&P research for Simmons & Co. International.

“The acquisition translates to a headline dollar per acre price of $20,200 per acre,” Hammond said.

Marathon’s Eagle Ford assets have performed solidly. In the first quarter, the company reported production up about 22% over the prior quarter to 72,000 net barrels of oil equivalent per day.

Marathon Eagle Ford Performance, First Quarter

Wells

Drilled 76 gross, 68 brought to sales

Spud to spud time

Reduced to 18 days

Wells drilled off multi-well pads

80%

Oil production transported to market via pipelines

65%

Source: Marathon

Likewise, the Angola sale makes sense following the divestment of Block 31, Hammond said.

“The price of $590 million for 10% interest in Block 32 is reasonable,” he said.

In 2009, MRO sold a 20% interest in Block 32 to CNOOC and Sinopec for $1.3B giving the remaining stake a ballpark value of $650 million.

“First oil production has been consistently pushed back at Block 32, however, perhaps helping to explain the lower price here,” he said.

“The share repurchases underscore our commitment to financial discipline and creating long-term value for our shareholders,” said Lee M. Tillman, Marathon president and CEO. “With the anticipated sale of our interest in Angola Block 32, we have now completed or agreed to divestitures totaling approximately $3.5 billion, surpassing the $3 billion upper end of our stated three-year target.

“We continue to evaluate our portfolio for high-grading opportunities and expect that process to remain evergreen and integral to our forward business plans.”

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