Marathon fully exits Libyan operations to Total for USD450 million

Marathon announced this morning that it had sold its Libyan upstream operations to Total for USD450 million. Marathon had a 16.33% in the Waha licence area which covers a series of blocks in northern Libya and encapsulates a large number of fields and discoveries. Although Waha predominantly produces oil, there are significant undeveloped gas discoveries as well.

Waha licence acreage
Source: Wood Mackenzie

The divestment represents a full exit of Libya by Marathon as it makes a continued shift back to the US where it has a high margin, short cycle shale portfolio. The sale makes it the seventh country exit by Marathon since 2013 as part of its ongoing portfolio streamlining exercise.

Marathon has been lucky to find a buyer for its Libyan operations, with the country mired in civil war and competing factions fighting for power to rule. Waha and other Libyan production has been subject to halts in production for the past few years as conflict and destruction of infrastructure has heavily impacted the oil & gas industry. Libyan production has been recovering of late but risk of intermittent outages remain high.

Libyan oil production and exports
Source: Bloomberg

For Total, this deal shows its continued and relentless drive for growth as it looks to pick up assets near the bottom of the cycle, topping up a list of recent acquisitions including ENGIE’s LNG business for USD1.5 billion in November 2017 and Maersk’s E&P business for USD7.4 billion in August 2017. The geopolitical and above ground risk presented by Libya does not seem to have scared of Total.

The other partners in Waha are ConocoPhillips (16.33%), Hess (8.16%) and the state oil company NOC (59.18%)

Main oil & gas fields in Libya
Source: IEA

Related post: Waha resumes production - a brief history of the Waha fields