By Steve Gelsi
Reporting from New York— Marathon Oil Corp. said Wednesday that it planned to buy acreage in the natural gas-rich Eagle Ford shale region of Texas in a deal valued at $3.5 billion, accelerating efforts to build up its exploration and production portfolio as the Houston company moves to spin off its refining unit.
Marathon will buy properties held by Hilcorp Resources Holdings, a partnership between affiliates of Hilcorp Energy Co. and Kohlberg Kravis Roberts & Co. KKR said its stake in the deal was worth about $1.13 billion.
The deal underscores energy companies' attention focused on Eagle Ford shale, prized because of its liquid resources, which fetch higher market prices than "dry" natural gas.
Along with other transactions expected to close by the end of 2011, its Eagle Ford acreage position in Texas is expected to more than double to 285,000 acres, Marathon said.
The deal includes about 141,000 acres in Atascosa, Karnes, Gonzales and DeWitt counties in Texas, plus an opportunity to buy about 14,000 additional acres through tag-along rights and other leasing.
The Eagle Ford deal comes on the heels of Marathon's board voting to approve spinning off of its refining and marketing business through the distribution of shares of Marathon Petroleum Corp. to holders of Marathon Oil common stock.
Marathon Petroleum will become an independent company trading on the New York Stock Exchange under the symbol MPC.
Gelsi writes for MarketWatch.com/McClatchy.