Marathon Buys Western Oil Sands for $5.56B

Marathon Oil Corp. Tuesday agreed to buy Canada’s Western Oil Sands Inc. for $5.56 billion plus assuming $650 million in debt.

The deal will give Houston-based Marathon access to more than 300,000 gross acres of oil sands, of which more than 200,000 acres are expected to be developed by mining, the fifth largest U.S. refiner said.

Western shareholders will get $3.6 billion in cash and 34.3 million shares of Marathon common stock and securities exchangeable for Marathon common stock, Marathon said.

The agreement requires Western, of Calgary, Alberta, to spin off subsidiary WesternZagros, with interests in the Middle East’s Kurdistan region, before the closing, expected by December.

Alberta’s oil sands — extremely heavy crude oil mixed with sand or clay and water –currently produce about 1.2 million barrels a day, but are expected to produce 3.7 million barrels a day by 2020, The Wall Street Journal reported.

Much of this new supply is expected to be exported to the United States.

Marathon’s strategically advantaged U.S. Midwest downstream business is well positioned to provide both near- and long-term solutions to maximize the value of these substantial bitumen resources, President and Chief Executive Officer Clarence Cazlot Jr. said.