Marathon Oil said Monday that it has signed a definitive purchase and sale agreement to acquire PayRock Energy Holdings for $888 million.
PayRock, a portfolio company of EnCap Investments, has about 61,000 net surface acres and current production of 9,000 net barrels of oil equivalent per day in the oil window of the Anadarko Basin STACK play in Oklahoma.
Marathon said the acquisition will provide 330 million BOE proved plus probable resource with 490 gross company operated locations.
The deal is also expected to provide 700 million BOE total resource potential from increased well density in Meramec and Woodford, as well as Osage development.
Marathon said that, overall, the deal will expand its STACK proved plus probable resources to over 1 Billion BOE.
The acquisition has an implied acreage value of $11,800 per acre adjusting for proved developed producing reserves.
Marathon said the acquisition will be funded with cash on hand.
The transaction is subject to customary closing conditions and is expected to close in third quarter 2016.
“We expect the 2016 capital program on the acquired acreage will be covered within our current $1.4 billion budget. As we look into 2017, we would anticipate a minimum four-rig drilling program in our pro forma STACK position, which will achieve leasehold drilling requirements while accelerating delineation work,” Marathon Oil President and CEO Lee Tillman said.