Marketed: Marathon Oil SOHOT Drilling Project

The following information is provided by Energy Advisors Group Inc. (EAG), formerly PLS Divestment Services. All inquiries on the following listings should be directed to EAG. Hart Energy is not a brokerage firm and does not endorse or facilitate any transactions.

Marathon Oil Co. retained Energy Advisors Group Inc. (EAG) to market for sale its oil and gas leasehold located in Caddo County, Okla., with potential throughout the Pennsylvanian Hoxbar section, also known as the Southern Oklahoma Hoxbar Oil Trend (SOHOT).

According to EAG, the drilling project offers an attractive opportunity to acquire a large-scale, resource play with multiple target zones analogous to nearby successful drilling by Unit Petroleum and others. The firm believes it is a "perfect project" for a new company (with or without private equity) looking for a starter project. The high net revenue (about 80.8% net revenue interest) offer an additional opportunity to acquire, drill, hold and flip for cash and a retained override.

RELATED:

Marketed: Marathon Oil Horizontal Oklahoma Well For Sale

Why Buy?

The package offers an attractive opportunity to acquire a large-scale resource play with multiple taregt zones analagous to nearby successful drilling by Unit Petroleum.

Large, Contiguous Position: about 37,372 net acres

• Long Laterals. Contiguous leases ideal for extended reach and pad development.
• All Rights. Vast majority of acreage has depth rights to all formations.
• Quality. Comparable rock quality and net thickness is seen between the asset. and offset high performers drilled by Unit Petroleum in the Marchand in southwestern Grady County, Okla.;
• Low Lease Burden. Favorable net revenue interest (19.2% average lease burden).
• Time. No material lease expirations until April 2020 with 19,900 acres having a further two-year extension option.
• Plans. Development plan includes an initial drill out of 72-Marchand wells over three years with a potential of 200-plus more wells—EUR of 278,000 barrels of oil each

High-Quality Rock, Stacked Pay within Multiple Productive Formations

• Asset targets the Pennsylvanian Hoxbar section in the Anadarko Basin
• Additional upside in multiple formations including Hogshooter, Medrano and Culp among others

Geology

The regional Pennsylvanian Hoxbar petroleum system is continuous from Grady through Caddo County. The net sand and PhiH of the system compares favorably to southwest Grady County where multiple high-performing wells have been drilled and completed. The "SoHot" Hoxbar play is also known as the “Southern Oklahoma Hoxbar Oil Trend." The Hoxbar is a roughly 2,000 ft thick, Pennsylvanian-age sequence of sand and shale intervals which estimates it to contain four to six sand intervals that may be commercial.

According to one report, Unit Corp. drilled its first well in the play in 2013 and quickly became a core position. By late 2018, Unit had drilled and completed horizontals in two zones including the:

a. Marchand—deeper, oily zone at around 11,000 ft

b. Medrano—more shallow zone; gassy zone; 9,800 ft

With a 4,300-ft lateral, the Marchand wells cost some $7 million and may produce 300,000-500,000 barrels of oil equivalent, 80%-90% oil. With a similar lateral, the shallower Medrano wells cost some $4.2 million and may produce 3 billion to 4.5 billion cubic feet of gas equivalent, 30% liquids

Physical Data Room Presentations

• Available by Appointment made through EAG representative
• Presentation will be one to two-hour sessions focusing on introducing the technical and geologic story
• Quick review of certain commerical materials

Divestiture Process

• Negotiated Sale Process.
• Submit offers immediately for direct negotiations
• Preference to sell the prospect in a single transaction for cash:
• Financing needs and approvals should be in place when PSA is executed

The prospect and its acreage are owned by Poblano Energy LLC, a wholly owned subsidiary of Marathon Oil.

Highlights:

• Caddo County, Okla., Multi-pay Project
• About 37,372 Acres. Includes All Depths.
• Productive Marchand Target
• Thick Hoxbar and Springer Gas
• Hogshooter, Medrano and Culp
• High Rock Quality
• Contiguous Acreage. Lateral Development
• 100% Operated Working Interest; High Net Revenue Interest
• Development Plan To Drill 70 Wells
• Favorable Lease Expiry Terms/Extensions
• 50% Leases Extendable to Five Years
• Marchand EUR: 278,000 barrels of Oil and 338 million cubic feet of Gas
• Motivated Seller
• Virtual Data Room plus Third Party Technical Review
• Marathon Seeks Immediate Ideas

Click here to view the online data room or visit energyadvisors.com/deals to view our other 30+ assignments.

For more information, contact Carrie Calahan, with EAG, at ccalahan@energyadvisors.com or 713-600-0138.