Marathon Oil Plans To Sell Part Of Alba Field LNG Produce To Glencore

Marathon Oil Corp MRO, through its wholly-owned subsidiaries, inked a five-year firm LNG deal with Glencore PLC GLCNF to sell a part of its natural gas produced from the Alba Field in Equatorial Guinea.

The financial terms of the deal, effective January 1, 2024, were not disclosed.

The pricing structure for the LNG sales agreement is related to the Dutch Title Transfer Facility (TTF) index, less a fixed transportation fee, offering Marathon Oil a significant incremental exposure to the European LNG market.

On a separate note, MRO plans to optimize its Equatorial Guinea integrated gas operations in 2024 by redirecting a portion of Alba Unit natural gas from the local methanol facility (MRO 45% working interest) to the LNG facility (MRO 56% working interest), owing to projected arbitrage between LNG and methanol pricing. 

Also Read: Why Marathon Oil Stands Out: Analyst Points To Untapped Potential In Equatorial Guinea And Robust FCF Estimates

"I'm excited to announce this new sales agreement linked to the European LNG market, signaling the conclusion of the legacy Henry Hub linked contract. The timing of this new sales agreement, EG LNG's track record of reliable operations, and the plant's proximity to Europe resulted in tremendous demand and an extremely competitive process. At recent forward curve pricing, we expect to realize an approximate year-on-year EBITDA increase of over $300 million next year across our E.G. integrated gas business, reflecting our differentiated and increasing exposure to the global LNG market," stated Lee Tillman, chairman, president, and CEO.

Marathon Oil plans to issue its Q3 FY23 earnings results on November 1, 2023.

Price Action: MRO shares are trading higher by 0.49% at $28.59 premarket on the last check Tuesday.