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In a move to boost oil and natural gas exploration and production in a highly targeted and energy rich region of Texas, Houston-based Marathon Oil will pay $3.5 billion to Hilcorp Resources Holdings.

Just a year ago, private equity firm, Kohlberg Kravis Roberts & Co. (KKR) made an initial investment of $400 million to form the joint venture, Hilcorp Resources, with Hilcorp Energy of Houston.

“This transaction enhances our already strong North America position focused on unconventional, liquids-rich resource plays that provide low-risk, scalable and profitable growth,” said Clarence P. Cazalot Jr., Marathon’s chief executive. “This and other projects under development serve as a catalyst for Marathon to increase our projected upstream production growth to 5 to 7 percent on a compound average annual growth rate during the period 2010-2016.”

Marathon will get 141,000 net acres within the Eagle Ford shale formation in Texas. The region overlaps Atascosa, Karnes, Gonzales and DeWitt counties the southern part of the state. As of May 1 the land was producing 7,000 barrels of oil equivalent per day. Marathon plans to add new wells and produce 80,000 barrels per day by 2016.

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The Eagle Ford formation has become one of the most active plays in the country because it contains not only natural gas, but crude oil as well. And the price of oil is skyrocketing again.

Oil prices have surged more than 30 percent in the past 12 months and a barrel was trading above $100 earlier this week. Natural gas prices have remained relatively flat.

Marathon said that the 36 wells currently working in the area are producing mostly crude oil and condensate.

The deal should close Nov. 1.

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