Marathon Oil Company Completes Merger of Pennaco Energy, Inc.
Marathon Oil Company announced that it has completed the acquisition of Pennaco Energy, Inc. (AMEX: PN), through a merger approved by the Pennaco shareholders at a meeting held in Houston on March 26. Under the terms of the merger, shares not held by Marathon were converted into the right to receive $19 in cash.
Marathon's intention to acquire Pennaco was announced on December 22, 2000 and the subsequent tender offer closed on February 5. At that time Marathon acquired 86% of Pennaco stock. With the merger, Pennaco is now a wholly-owned subsidiary of Marathon Oil. The total cost of the acquisition was approximately $500 million, including net debt of $54 million.
Marathon's Pennaco operations will be run from Pennaco's office in Denver. Terry Dobkins, former vice president of Production for Pennaco will head the new unit and report to Steve Hinchman, Marathon's senior vice president of Worldwide Production.
"Much of the growing demand for energy in the United States will be met by natural gas, particularly the growth in electric power generation," said Hinchman. "The North American gas market is a core area for Marathon, and this acquisition boosts our already strong presence. These assets add significant new reserves that we plan to develop and deliver quickly to the marketplace.
"This is a focused operation with talented people who are determined to make a difference to Marathon's natural gas business. Furthermore, I am delighted to say that we have had a 98 percent acceptance rate for the job offers made to the Pennaco team following the merger."
Pennaco was founded in 1998 and is entirely focused on the production of coal bed methane gas (CBM) from the Powder River Basin, located in northern Wyoming and southern Montana. The company is one of the largest leaseholders in this play with over 400,000 net acres and current net production of over 50 million cubic feet of natural gas per day. Net proven reserves are estimated at approximately 200 billion cubic feet, with probable reserves of over 800 billion cubic feet. Marathon estimates that the ultimate acquisition and development costs of the proven, plus probable reserve base will be around $4.50 per barrel of oil equivalent.
Marathon Oil Company, part of the USX-Marathon Group (NYSE: MRO) and a unit of USX Corporation, is a large fully integrated oil firm engaged in the worldwide exploration and production of crude oil and natural gas. Through Marathon Ashland Petroleum LLC, the Company also refines, markets and transports petroleum products in the United States. Visit the company's Web site at www.marathon.com or www.usx.com.
This release contains forward-looking statements with respect to estimated proven reserves, potential additional reserves, plans for prompt development and the presently expected development costs. This forward-looking information is based on certain assumptions (including, among others) presently known physical data concerning size and character of reservoirs, economic recoverability, ability to obtain required permits, future drilling success, production experience, industry economic conditions (such as supply and demand), levels of company cash flow from operations and operating conditions. This forward looking information may prove to be inaccurate and actual results may differ significantly from those presently anticipated. In accordance with "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, USX has included in Form 10-K, for the year ended December 31, 2000, cautionary language identifying other important factors, though not necessarily all such factors, that could cause future outcomes to differ from those set forth in these forward-looking statements.
SOURCE: Marathon Oil Company
Contact: Roger Holliday or Susan Landreneau, both of Marathon Oil