UBS Raises Price Target on Marathon Oil (MRO) Following PayRock Energy Purchase Agreement

UBS reiterated a Buy rating on Marathon Oil (NYSE: MRO), and raised the price target to $17.00 (from $16.00), following the company's agreement to purchase privately held PayRock Energy for $888MM.

Analyst William Featherston commented, "MRO agreed to purchase privately held PayRock Energy for $888MM, below expectations of >$1bn (a Bloomberg article in May reported the owner was seeking at least $1.5bn). PayRock has ~61,000 net surface acres & current production of 9 MBoed in the oil window of the STACK play, with 2/3 of the acreage in the largely delineated area & 1/3 to the less developed east. Adjusted for PDP reserves, the implied acreage value of $11,800/acre is well below the ~$20,000/acre DVN paid for its STACK acquisition from Felix Energy (which has most of its acreage in the high pressured window of the play). The deal is expected to close in 3Q & funded with cash on hand (UBSe ~$3.0bn pre-deal, pro-forma for announced asset sales)."

For an analyst ratings summary and ratings history on Marathon Oil click here. For more ratings news on Marathon Oil click here.

Shares of Marathon Oil closed at $14.48 yesterday.

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