Houston, Texas based Marathon Oil Corporation announced Monday its $888 million purchase of PayRock Energy Holdings, an Oklahoma City portfolio company of Encap Investments.
Marathon’s purchase raises its holdings in Oklahoma from 265,000 acres before the acquisition to 326,000 acres afterward. Earlier in the year, the company confirmed it had distributed $204 million or 14% of its total capital spending to Oklahoma.
Payrock Energy had focused on the development of resources in the STACK play in the state, an oil and gas rich area focused mostly in Blaine, Kingfisher and Canadian Counties.
Lee Tillman, CEO at Marathon said when oil prices increase, the additional 61,000 acres of leased land will be more attractive for his company’s investment.
“The asset quality is exceptional, we certainly see that next incremental dollar of capital, as prices get more constructive, flowing into Oklahoma,” said Tillman. “Acquiring Payrock’s STACK position will meaningfully expand the quality and scale of Marathon Oil’s existing portfolio in one of the best unconventional oil plays in the U.S.”
The purchase is expected to be completed in the third quarter of 2016. Marathon has already cut its production, sold off stocks worth more than $1 billion and reduced spending to support the acquisition. The company also plans to sell off oil and gas acreage thaty it says is not considered center to its operations.