UPDATE 1-Marathon to buy Western Oil Sands for $5.56 bln
(Recasts with acquisition, adds details)
NEW YORK, July 31 (Reuters) - Marathon Oil Corp <MRO.N>
said on Tuesday it agreed to buy Canada's Western Oil Sands
Inc.<WTO.TO> for about $5.56 billion, giving the U.S. oil
company a foothold in one of the world's most promising streams
of new crude oil.
Marathon said it will pay about $3.6 billion in cash plus
34.3 million shares or securities exchangeable for shares. It
will also assume about $650 million of debt.
The company also said its second-quarter profit fell on a
decline in oil and gas output and the absence of a year-ago
gain from the sale of Russian operations.
Houston-based Marathon has long been looking for a partner
in the Canadian oil sands. Still, it is expensive and requires
special equipment to turn the tar-like sludge that comes from
the region -- called bitumen -- into usable fuel.
The company plans to link the Canadian fields with its
refining operations in the United States.
The deal also requires Western to spin-off its subsidiary
with interests in Kurdistan -- WesternZagros -- before the deal
closes, Marathon said.
Marathon said it would get access to proved mining reserves
of 436 million barrels of bitumen through the deal and a total
net resource of 2.6 billion barrels of bitumen that can be
recovered through mining or "in situ" processing, which uses
heat or solvents to remove the bitumen.
Marathon's net income slipped to $1.55 billion, or $2.25 a
share, from $1.75 billion, or $2.08 a share, last year.
Excluding one-time items, the company said it earned $2.25
a share. On that basis, the average forecast of Wall Street
analysts was $2.13 a share, according to Reuters Estimates.
The second quarter was a mixed bag for the integrated oil
sector as soaring refining margins were offset by lower
commodity prices and output at some large oil companies.
(Reporting by Michael Erman)
