Market Insider

Marathon Oil surges after $950M assets sale

Marathon Oil's stock closed up 12.4 percent Tuesday as the company dramatically reduced its risk exposure following a giant assets sale.

"MRO has now de-risked the story through at least 2017, positioning itself well into a potential turn in the commodity down the road," said Deutsche Bank, which has a "buy" rating on the stock, in a note Tuesday.

Marathon agreed to sell nearly $1 billion in non-core assets on Monday, bringing its total sales through divestitures to about $1.3 billion since last August.

Deutsche added that, while the company's price for its Shenandoah stake is a probably a negative for its partners, "the favorable price tag on the Wyoming side ... is a major positive takeaway in our view."

The oil and natural gas producer, which did not identify the buyers, said it will divest all of its Wyoming upstream and midstream assets for $870 million, excluding closing adjustments.

The Wyoming properties, mainly waterflood developments in the Big Horn and Wind River basins, averaged 16,500 barrels of oil equivalent per day in first quarter 2016 production. The deal, expected to close in mid-2016, also includes a 570-mile pipeline.

Other oil and gas-related companies also jumped Tuesday, with Dow components ExxonMobil and Chevron gaining 1.3 percent and 2.3 percent, respectively, and Chesapeake Energy soaring over 32 percent, as oil prices gained.

U.S. crude added over 3.5 percent Tuesday, and has gained over 20 percent in the last two months.

WTI in 2016

— Reuters contributed to this report.