- Nov 11, 2004
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There was a big acquisition announced today [subscription required] in the world of oil and gas, as Marathon Oil Corp (NYSE: MRO) is picking up Canada's Western Oil Sands Inc. for $5.56 billion plus assumed debt of $650 million.
The deal is going to give Marathon Oil a huge presence in one of the world's largest crude oil reservoirs, the Athabasca Oil Sands Project. The deal, which is scheduled to finalize during the fourth quarter of this yea,r is going to give Marathon control over 300,000 gross acres of oil sands.
There are lots of hopes riding on the future of oil coming out of the Canadian oil sands. While the cost of getting that oil out of the ground is much higher than the cost of normal oil exploration, there are several reasons why it is being viewed as very profitable. The primary reason is the close proximity that the area has to America, which is after all, the world's largest consumer. Being the closest supplier to the world's largest consumer of oil puts companies in Canada in a very enviable position.
Another reason why investors are pouring money into the Canadian oil sands is the ever present threat of instability in the Middle East. With all of the instability that surrounds the Middle East, one can never be sure if the supplies going West will be interrupted.
The area is currently producing 1.2 million barrels a day, but expectations are far higher for the higher. Analysts are estimating that the area is going to be pumping out 3.7 million barrels a day by 2020.
The company's acquisition plan was not the only item in the news today for Marathon. The company also posted second quarter earnings this morning of $2.25 per share which beat analysts' estimates of $2.12.
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.
There was a big acquisition announced today [subscription required] in the world of oil and gas, as Marathon Oil Corp (NYSE: MRO) is picking up Canada's Western Oil Sands Inc. for $5.56 billion plus assumed debt of $650 million.
The deal is going to give Marathon Oil a huge presence in one of the world's largest crude oil reservoirs, the Athabasca Oil Sands Project. The deal, which is scheduled to finalize during the fourth quarter of this yea,r is going to give Marathon control over 300,000 gross acres of oil sands.
There are lots of hopes riding on the future of oil coming out of the Canadian oil sands. While the cost of getting that oil out of the ground is much higher than the cost of normal oil exploration, there are several reasons why it is being viewed as very profitable. The primary reason is the close proximity that the area has to America, which is after all, the world's largest consumer. Being the closest supplier to the world's largest consumer of oil puts companies in Canada in a very enviable position.
Another reason why investors are pouring money into the Canadian oil sands is the ever present threat of instability in the Middle East. With all of the instability that surrounds the Middle East, one can never be sure if the supplies going West will be interrupted.
The area is currently producing 1.2 million barrels a day, but expectations are far higher for the higher. Analysts are estimating that the area is going to be pumping out 3.7 million barrels a day by 2020.
The company's acquisition plan was not the only item in the news today for Marathon. The company also posted second quarter earnings this morning of $2.25 per share which beat analysts' estimates of $2.12.
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.
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