Vermilion Energy to acquire Marathon Oil's interest in Corrib field

Thu. June 25, 2009; Posted: 10:41 AM

Jun 25, 2009 (Datamonitor via COMTEX) -- VETMF | Quote | Chart | News | PowerRating -- Vermilion Energy Trust has entered into an agreement to acquire Marathon Oil's 18.5% non-operated interest in the Corrib field located approximately 83km off the northwest coast of Ireland.

Vermilion will pay $100 million to Marathon on closing of the transaction, which is expected to occur before the end of 2009, subject to government and regulatory approvals.

Vermilion will also make an additional payment to Marathon, the amount of which will vary dependent on the date when first commercial gas from the field is achieved. This amount will range from approximately $300 million to $135 million.

Currently, first gas is expected by the end of 2011, and the expected additional payment due pursuant to the terms of the agreement would be between $190-$200 million. The deal structure, with a deferred payment, will help mitigate some of the risks associated with first gas timing.

Pursuant to the agreement, Vermilion will assume its share of future capital expenditure obligations in order to reach first gas, which are anticipated to range up to $300 million net to the acquired interest. These capital costs are primarily for the completion of the facilities necessary to bring this gas on-stream.

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