Oil and natural gas company Marathon Oil Corp (MRO.N) said it will expand into Kenya by acquiring an interest in two onshore exploration blocks licensed to Africa Oil Corp (AOI.V).
Marathon will pay $35 million to buy a 50 percent working interest in Block 9 and a 15 percent stake in Block 12A in northwest Kenya.
Marathon Oil said it could operate Block 9, which covers 7.5 million gross acres, if any commercial discovery is made.
Block 12A is about 3.8 million gross acres. Tullow Oil Plc (TLW.L), which owns a 65 percent interest, operates the block. Africa Oil holds a 20 percent interest.
Marathon will spend upto $43.5 million to fund Africa Oil's share of expenditures in the blocks over the next three years.
The companies expect the farm-out agreement to close in the third quarter.
Marathon Oil and Africa Oil have also agreed to pursue exploration activities in Ethiopia, subject to necessary Government approvals.
Marathon Oil shares, which have fallen about 25 percent in the past 5 months, were down 3 percent at $25.75 on Monday morning on the New York Stock Exchange.
(Reporting by Sunayan Bhattacharjee in Bangalore; Editing by Supriya Kurane)