Marathon Oil in Merger With Tarragon Oil

Marathon Oil Co., a Houston-based oil and natural-gas producer, agreed to buy Tarragon Oil & Gas for $1.1 billion in cash, stock and assumed debt to gain a foothold in western Canada’s natural gas-rich Alberta province. Marathon, a unit of the USX-Marathon Group, said it will pay $760 million in cash and stock and assume $340 million in debt. Marathon is buying wells in Canada as pipelines open that will let more of that nation’s gas reach U.S. markets, where prices for the fuel are higher. Calgary, Alberta-based Tarragon produces 210 million cubic feet of natural gas a day while Marathon produces 1.2 billion. The Canadian company will add 21,000 barrels of crude oil production to Marathon’s daily output of 172,000 barrels. Marathon’s bid, which has been approved by Tarragon’s board, will be voted on by shareholders in August.