The rush to invest in Canada’s oil sands is on (see yesterday’s post on Shell). Marathon Oil, the largest oil refiner in the U.S. Midwest, is set to become the latest international energy player to grab a stake in Alberta’s oil sands, after it announced a deal yesterday to buy Calgary-based Western Oil Sands Inc. for $5.84-billion.

The acquisition not only resolves the long-running quest by Western to find a buyer, but also provides Houston-based Marathon with the oil sands stake that it has been seeking.

Analysts said investors should not be surprised if a competing bid were to materialize and raised the possibility Marathon could be forced to sweeten its offer.

Marathon, the fourth-largest U.S.-based integrated oil and gas company and the fifth-largest U.S. refiner, sees the oil sands as a natural future source of crude for its refineries. The Midwest, where it is active, is the largest market for Canadian crude exports.

“Marathon’s strategically advantaged U.S. Midwest downstream business is well-positioned to provide both near- and long-term solutions to maximize the value of these substantial bitumen resources,” said Marathon CEO Clarence Cazalot.

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  • Lots of information available at:

    “HOUSTON, July 31, 2007 /PRNewswire-FirstCall via COMTEX News Network/ — Marathon Oil Corporation (NYSE: MRO) today announced it has reached agreement to purchase Western Oil Sands, Inc. (TSX: WTO) in a transaction valued at CDN$6.5 billion (USD$6.2 billion, based on July 27 noon exchange rate). Under the terms of the agreement, Western shareholders will receive CDN$3.8 billion (USD$3.6 billion) in cash and 34.3 million shares of Marathon common stock and securities exchangeable for Marathon common stock (valued at CDN$2.0 billion or USD$1.9 billion based on Marathon’s closing share price as of July 27). Marathon will also assume Western’s debt at closing, which as of June 30 was approximately CDN$700 million (USD$650 million). The acquisition is contingent upon Western shareholder approval and applicable regulatory approvals. The transaction is anticipated to close early in the fourth quarter of 2007. The acquisition agreement requires Western to spin-off WesternZagros, its wholly-owned subsidiary with interests in Kurdistan, prior to closing.

    “The AOSP Joint Venture also includes Shell Canada (operator, 60 percent) and Chevron Canada (20 percent). The oil sands mining operation encompasses the Muskeg River Mine, located north of Fort McMurray, Alberta, and the Scotford Upgrader, located near Edmonton, Alberta. (For more details about the AOSP Joint Venture project, refer to the Web site at”

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