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Houston energy company buys more Permian acreage for $700M

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Mar 21, 2017

Brought to you by the Houston Business Journal

Marathon Oil Corp. (NYSE: MRO) continues to bet on the Permian Basin with another multimillion-dollar deal for thousands of acres in the area that’s attracted the attention of energy companies in recent months.

Houston-based Marathon Oil bought 21,000 net surface acres in the Permian’s northern Delaware Basin in New Mexico from Fort Worth-based Black Mountain Oil & Gas LLC and other private sellers in a $700 million cash deal, according to a release. The deal is expected to close in the second quarter of this year.

The purchase comes after the Houston energy giant recently paid $1.1 billion for about 70,000 acres in the Permian earlier this month. At the same time, Marathon Oil also sold its Canadian assets for about $2.5 billion in cash.

“The combined deals provide us more than 90,000 acres in the Permian, over 70,000 of which is concentrated in the northern Delaware,” Marathon Oil President and CEO Lee Tillman said in the release. “While we expect to pursue additional trades and grassroots leasing, this bolt-on achieves the scale necessary for efficient long-term development in the basin.”

The Permian Basin is in West Texas and New Mexico. Its main components are the Midland Basin, the Central Basin Platform and the Delaware Basin. Companies have been increasingly turning to the Permian Basin in recent months, with new rigs being added almost every week and several asset deals reaching nine or 10 figures.

Oil prices have fallen about 7 percent this month following rising shale-oil production and inventories in the U.S., the Wall Street Journal reports.