Marathon CFO sees pick-up in U.S. natgas deals

HOUSTON, Nov 13 (Reuters) - The chief financial officer of Marathon Oil Corp (MRO.N) said on Thursday she expects smaller U.S. natural gas companies, wounded by the global credit crisis, to turn to consolidation as way to maximize shareholder value.

"I think you will see more activity," Janet Clark, Marathon's CFO told a conference of energy executives in Houston.

Smaller companies that rely on bank financing to fund drilling operations that are unable to execute their business plan will likely become targets for larger exploration companies who can pay cash, or they might combine in stock-for-stock deals, Clark said.

Energy companies that may be more eager for a deal are those that have large acreage positions in high cost resource plays, for example shale plays, which have an extremely high initial rate of production, Clark said.

In one recent example, Chesapeake Energy Corp (CHK.N) said Tuesday that Norway's StatoilHydro (STL.OL) agreed to pay more than $3 billion for a stake in the U.S. gas producer's assets in the Marcellus Shale. Chesapeake had struck a similar deal with BP Plc (BP.L).

Smaller U.S. exploration and production companies that borrowed heavily in recent years to fund their drilling programs have bit hard by the liquidity crisis, with many of them relying on asset deals to improve their liquidity.

And fallout from the financial crisis is just beginning to pinch smaller companies that work with Marathon's suppliers, a scenario that is likely to worsen.

"It's just going to get tougher and tougher," Clark said. "I'm not optimistic that the banks are going to open their pocketbooks."

The financial crisis is causing Marathon to look "a lot more closely at its budget," but the integrated oil company remains committed to its long-term capital plan, the CFO said. (Reporting by Anna Driver in Houston, editing by Leslie Gevirtz)