Marathon Oil Corp. signed its first agreements to explore for petroleum in Iraq’s Kurdistan region, acquiring positions in four exploration blocks as the company seeks to boost crude production.
Under contracts signed with the Kurdistan Regional Government, Marathon will have an 80 percent ownership and operate two blocks northeast of Erbil, the Houston-based company said in a statement today. The Kurdistan government will hold the remaining 20 percent stake. Financial terms weren’t disclosed.
The company also said it will have a 20 percent working interest in the Atrush block and 25 percent in the Sarsang block north-northwest of Erbil, Kurdistan’s capital. Oil producers in northern Iraq were forced to halt exports last year after a dispute involving Kurdish authorities and Iraq’s central government.
“There’s obviously potential pitfalls associated with being there, but I think that it’s worth trying it and seeing what happens,” said Philip Weiss, an analyst at Argus Research in New York who has a “buy” rating on Marathon shares and owns none.
Marathon sees “a good, high-potential exploration opportunity” that is in the early stages, said Lee Warren, a company spokeswoman. She declined to comment on a timeline for exploration.
Iraq has the second-largest oil reserves in the Middle East, after Saudi Arabia, and wants to more than double its current crude output of 2.4 million barrels a day. To raise oil production, the government awarded a dozen service contracts to international oil companies including Exxon Mobil Corp. and OAO Lukoil in two licensing rounds last year.
Marathon rose 58 cents, or 1.7 percent, to $35.68 at 4 p.m. in New York Stock Exchange composite trading. The shares have risen 14 percent this year.