Marathon Oil Bets Big On Louisiana’s Austin Chalk Upside

The Austin Chalk formation has increasingly been a core focus in the Eagle Ford region in South Texas (the Eagle Ford shale formation and the Austin Chalk formation are the bedrocks of oil & gas development activity in the area), but a new AC development region has entered the fold.

Numerous upstream operators have acquired large leaseholds across acres thought to be productive for the Austin Chalk play in Louisiana, and energy investors should take note. Austin Chalk well economics in South Texas are clearly in the Tier 1 category, so any emerging play with a chance to replicate that success needs to be kept on your radar. For starters, take a look at Marathon Oil Corporation (NYSE:MRO), which just acquired a large position in the emerging play during the first half of 2018 on the cheap. Let’s dig in.

During the first half of 2018, Marathon Oil Corporation spent $250 million “predominantly on leasing in the emerging Austin Chalk play in Louisiana.”This gave Marathon Oil a ~240,000 net acre leasehold position in Louisiana, which is centered around Rapides, Allen, Evangeline, St. Landry, and Avoyelles parishes in Central Louisiana. Note that this position was acquired for just under $900 per net acre (for a total spend of ~$216 million), with the remaining expenditures going towards related activities…

 

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