Exhibit 99.1.
Marathon continues international growth strategy: announces plans to acquire CMS
interests in Equatorial Guinea, West Africa
Houston, November 2, 2001 - Marathon Oil Company (NYSE:MRO) announced today that
it has signed a Purchase and Sale Agreement with CMS Energy to acquire all of
its upstream and downstream interests in Equatorial Guinea, West Africa. The
acquisition is part of Marathon's plans for profitable growth through the
creation of a number of new core business areas.
Through this transaction Marathon will acquire:
- 52.4% interest in, and operatorship of, the offshore Alba Block, which
contains the currently producing Alba gas field as well as undeveloped oil
and gas discoveries, and several undrilled exploration prospects;
- 37.6% interest in the adjacent offshore Block D;
- 52.4% interest in a condensate separation facility, onshore Bioko Island;
- 45% interest in a joint venture onshore methanol production plant; and
- 43.2% interest in an onshore Liquefied Petroleum Gas (LPG) processing
plant.
The total cash consideration of this acquisition is $993 million. The
transaction is subject to appropriate government approvals and is expected to
close in early January 2002.
The Alba field, which began producing in 1991, is estimated to contain a
producible resource of 5 trillion cubic feet of dry gas and 300 million barrels
of condensate. Currently, 230 million cubic feet per day (mmcfd) gross of wet
gas is produced, from which approximately 17,000 barrels per day gross of
condensate and 2,400 barrels per day gross of LPG are recovered through process
facilities on Bioko Island. Approximately 115 mmcfd of the remaining lean gas is
then fed to the methanol plant. Marathon's net share of production is expected
to average almost 18,000 barrels of oil equivalent per day (BOE/d) in 2002.
Plans have been submitted to increase gross production to about 800 mmcfd and
expand the condensate recovery and LPG facilities to significantly increase the
liquids processing capabilities. This should result in Marathon's net
production increasing to 35,000 - 40,000 BOE/d by 2004. Expansion plans will
require approval by the host government and other venture participants.
Marathon's net reserves associated with this acquisition total 142 million
barrels of liquids and 646 billion cubic feet of gas, or 250 million BOE. Of
this total, approximately 183 million BOE of proven reserves will be booked on
closing with the remainder on securing the appropriate approvals for the
expansion project in early 2002. Based on the 250 million BOE reserve level,
the cash acquisition cost is $3.97 per BOE. By including $327 million of
anticipated future development costs, the full cycle acquisition and development
costs is a very competitive $5.28 /BOE.
Significant incremental potential value exists in commercializing the remaining
dry gas reserves. Marathon sees great promise in known technologies that could
allow this gas, and future opportunities, to be commercialized.
"This acquisition will establish a new core business area for Marathon and is a
great fit with our strategy of acquiring profitable growth opportunities that
add substantial value, provide immediate cash flow and have significant upside
potential", said Marathon president, Clarence Cazalot. "Furthermore, this is an
important new step in growing our integrated gas business where the application
of gas commercialization technologies will deliver added-value products for
local, U.S. and European markets. I see Marathon becoming a significant
regional player in West Africa as we build on our expertise across the energy
value chain and the relationships we have already established in this part of
the world."
Salomon Smith Barney Inc., served as advisor to Marathon on the transaction.
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.
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This release contains forward-looking statements with respect to completion of
the acquisition, estimated proven reserves, potential additional reserves,
estimated future production rates 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, technology development, 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 its Annual Report Form 10-K for the year ended
December 31, 2000, as amended by Forms 10-K/A, and in subsequent Forms 10-Q and
8-K, cautionary language identifying other important factors, though not
necessarily these such factors, that could cause future outcomes to differ from
those set forth in forward-looking statements.