Business

Marathon to buy Western Oil Sands for $6.5B

Calgary-based Western Oil Sands Inc. has agreed to be acquired by Houston's Marathon Oil Corp. in a cash and stock deal worth $6.5 billion.

Calgary-based Western Oil Sands Inc. has agreed to be acquired by Houston's Marathon Oil Corp. in a cash and stock deal worth $6.5 billion.

Western shareholders will receive $3.8 billionin cash and 34.3 million shares of Marathonworth $2 billion.Marathon will also assume $700 million of Western's debt.

Shares of Western Oil Sands jumped $3.05 to $37.18 in morning trading on the TSX.

Western has a 20 per cent interest in the huge Athabasca Oil Sands Projectin northern Alberta and also has extensive downstream assets in the U.S. midwest.

"The Athabasca Oil Sands Project is truly a world-class asset with multi-billion barrel, long-life resource potential," said Marathon CEO Clarence Cazalot in a release.

"We are joining an ongoing and expanding project with strong partners, and collectively, we will be able to apply our technical and commercial skills to maximize both the recovery and value of these resources."

Marathon Oil had long been seeking a foothold in the booming Canadian oilsands market.

The Athabasca project's Muskeg River mine is already producing 155,000 barrels a day of bitumen.

The deal requires the approval of Western Oil Sands shareholders.

now