2nd UPDATE: Marathon Oil: US Trade Regulators Reviewing Alaska Deal With Hilcorp

  -- FTC reviewing Marathon's deal to sell Alaska oil and gas assets to Hilcorp 
  -- Marathon confident of closing deal by the fall of this year 
  -- Hilcorp has made new investments in Alaska's Cook Inlet in past year 
 

(Adds comments from Alaska official final two paragraphs.)

 
   By Angel Gonzalez and Ryan Dezember 
 

Marathon Oil Corp. (MRO) said Tuesday that the U.S. Federal Trade Commission is reviewing its deal to sell Alaska oil and gas assets to Hilcorp Energy Corp.

A company spokeswoman said Marathon has received a "civil investigative demand and subpoena" from the FTC, and that it has been working with the agency in the matter. "We remain confident that we will close the transaction, subject to completion of the necessary Government and regulatory approvals, during the fall of this year."

An FTC spokesman couldn't be reached for comment. Nor could representatives of Hilcorp, which is based in Houston.

Marathon announced the deal in April, and said then it expected the deal to close by the fall.

The sale includes 17 million barrels of oil equivalent of net proved reserves across 10 fields in Alaska's Cook Inlet, as well as natural gas storage and stakes in natural gas pipelines.

In January, Hilcorp closed a deal with Chevron Corp. (CVX) to buy its oil-and-gas-producing fields around Alaska's Cook Inlet. Those assets were producing 3,900 barrels of oil and 85 million cubic feet of natural gas daily when the deal closed.

Financial terms of both transaction have been withheld by the companies.

Alaska's natural gas market is disconnected from that of the lower 48 states, which have seen prices for the fuel fall as producers unleashed new supplies from shale formations.

Alaskan prices, meanwhile, track closer to global prices, which are much higher than those in the lower 48 states.

The natural gas that provides fuel for much of Alaska's population comes from the Cook Inlet on the state's southern coast.

Drilling declined in the inlet in recent decades as energy producers turned their attention to Alaska's prolific North Slope oil fields.

Much of the gas mined there, however, is reinjected into the ground because there is no means to transport it to the state's population centers to the south.

In the last year, however, producers including Hilcorp, Apache Corp. (APA) and Buccaneer Energy Ltd. (BCC.AU) have made new investments in Cook Inlet.

Hilcorp would account for between 60% and 80% of the Alaskan gas market, depending on the season, if it completes the acquisition, said Joe Balash, Alaska's deputy commissioner of Natural Resources. The volume of gas on the market in Alaska fluctuates because some is exported via a ConocoPhillip-owned liquefied natural gas terminal during summer when local demand for the heating fuel declines. Mr. Balash said that he supports Hilcorp's acquisition because he believes the company will invest money to increase production on the fields it acquires.

-Write to Angel Gonzalez at [e-mail] and Ryan Dezember at [e-mail]

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