Marathon Oil Corp., Houston, (NYSE: MRO) plans to sell its Pennaco Energy Inc. subsidiary, which operates coalbed-gas assets in the Powder River Basin of Wyoming and Montana. "Strong natural gas prices and recent sales transactions in the Rocky Mountains indicate that now is the appropriate time to solicit potential offers for these interests," the company reports. Otherwise, the divestment is part of the company's "ongoing efforts to actively manage its global asset portfolio to ensure alignment with its business strategy and to generate sustainable value growth." Marathon is the largest coalbed-gas acreage-holder in the Powder River Basin with more than 650,000 net acres in northeast Wyoming and southeast Montana. Its production there averaged approximately 72 million cu. ft. of gas per day (net) during first-quarter 2004. At year-end 2003, Marathon's total reserves in the Powder River Basin exceeded 2 trillion cu. ft. of gas, of which 388 billion cu. ft. were booked as proved. At the current market price for proved Rockies reserves, the Pennaco assets may fetch more than $800 million. Marathon bought Pennaco in 2001 for $500 million when it had 200 billion cu. ft. of proved reserves. Current production from Pennaco is some 10% of its U.S. gas production. The sale would not include any of Marathon's conventional oil and gas operations in Wyoming or Montana. Plans call for the bidding process to conclude in the third quarter. Closing could be in the fourth quarter.
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