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Marathon ends talks to sell part of Athabasca oil sands interest

The Athabasca Oil Sands Project, in which Marathon Oil holds a 20 per cent interest

Marathon Oil

Marathon Oil Corp. has called off talks to sell a portion of its stake in a major Alberta oil sands mining operation, adding to a growing list of sales efforts in the sector that have come up dry.

Houston-based Marathon said in October it was in discussions to sell part of its 20-per-cent interest in the Athabasca Oil Sands Project, operated by Royal Dutch Shell PLC. It did not name the suitor, though Reuters had reported India's Oil and Natural Gas Corp. approached Marathon to buy half its interest in the 255,000-barrel-a-day development.

"An agreement was not reached with the prospective purchaser and negotiations have been terminated," Marathon said in a statement on Thursday. "Marathon Oil is not engaged in further discussions with respect to a potential sale of these assets."

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Other companies, including ConocoPhillips Co. and Koch Industries Inc., had put oil sands assets on the block over the past year and a half, but took most of the properties off the market when bids failed to meet their expectations against a backdrop of volatile Canadian oil prices and uncertainty over export pipeline expansion plans.

Marathon spokeswoman Lee Warren declined to say why the company and the would-be buyer could not strike a deal, but stressed that the assets were still generating value for shareholders. The potential oil sands deal was not factored in to a corporate target to divest $1.5-billion (U.S.) to $3-billion of assets from 2011 through 2013, the company said.

In its first-quarter results released early this month, Marathon said its interest in the project generated $38-million in net income, up from $17-million a year earlier, as the northern Alberta mines and Edmonton-area upgrader improved reliability.

Shell has a 60-per-cent stake in the venture and Chevron Corp. has the remaining 20 per cent.

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About the Author
Mergers and Acquisitions Reporter

Jeffrey Jones is a veteran journalist specializing in mergers, acquisitions and private equity for The Globe and Mail’s Report on Business. Before joining The Globe and Mail in 2013, he was a senior reporter for Reuters, writing news, features and analysis on energy deals, pipelines, politics and general topics. More

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