Husky Energy puts final touches to $588 million Marathon Oil deal

Gary Park

Petroleum News Calgary correspondent

Husky Energy, the smallest of Canada’s five integrated oil companies, has wrapped up its $588 million purchase of Marathon Oil’s Western Canada operations.

As part of the transaction, Husky will pocket $320 million by spinning off shallow natural gas and oil assets in southeastern Alberta to Houston-based EOG Resources.

Husky will retain properties located primarily in northern and southern Alberta and northeastern British Columbia, adding 90 million cubic feet of gas and 4,500 barrels of oil and natural gas liquids to its daily output and boosting its proven reserves by 183 billion cubic feet of gas and 9.2 million barrels of liquids.

The gain for EOG is about 7,500 gross bpd of oil equivalent at a cost to EOG of about C$60,000 for each daily barrel of production — a hefty premium compared to the typical payment to acquire production. Husky is paying an unusually low amount at C$20,000 for barrel.

EOG will also gain 73,000 net acres in addition to its existing 63,000 net acre coalbed methane position.

Marathon decided in the spring to sell its holdings in the aging Western Canada Sedimentary Basin, but retain its holdings in the offshore Nova Scotia region.