Houston – Marathon Oil Corp. is poised to break into Canada’s growing oil-sands market, announcing Tuesday that it has agreed to buy Western Oil Sands Inc. for $5.5 billion in cash and stock.
Shareholders of Western Oil, based in Calgary, Alberta, will get $3.6 billion in cash and $1.9 billion in Marathon stock. Marathon also will assume $650 million in Western Oil debt, valuing the total deal at roughly $6.2 billion.
As part of the deal, Western Oil is required to spin off WesternZagros, its wholly owned subsidiary with interests in Kurdistan, before the transaction closes. The deal is expected to close in the fourth quarter of this year.
Marathon said the deal gives it a 20 percent interest in the Athabasca Oil Sands Project in Alberta currently held by Western Oil. Shell Canada Ltd. and Chevron Canada Ltd. hold the remaining 60 percent and 20 percent stakes, respectively.
The benefit, Marathon said, is immediate net production of about 31,000 barrels a day of bitumen, a thick oil. The Athabasca project mines the oil-sands deposits and extracts the bitumen, which is upgraded to synthetic crude oil.
