Marathon Oil Corp. joins a slew of U.S. producers selling shares to shore up their finances as they endure the worst market rout in a generation.
The producer plans to offer 135 million common shares, and underwriters will have the option to buy an additional 20.25 million, Houston-based Marathon said in a statement. That total would amount to about $1.3 billion at the closing price Monday, making it the company’s biggest share raise on record and increasing shares outstanding by about 20 percent. The stock, which is down 35 percent this year, fell 3.8 percent to $7.90 after the close of regular trading as of 7:27 p.m. in New York.
Marathon is the latest U.S. oil company raising money by selling shares as it seeks funds to help ride out the worst oil- price downturn in decades. Devon Energy Corp. raised about $1.5 billion last week. Pioneer Natural Resources Co. and Hess Corp. are among other producers that offered shares to raise cash.
“It supports the notion that Marathon will have the cash to continue to weather this downturn,” said Brian Youngberg, an analyst at Edward Jones in St. Louis. “These are unusual times and, at the end of the day, the focus is on liquidity and credit.”
Last year, the company cut its dividend by 76 percent to preserve cash. Earlier this month, Marathon also slashed its 2016 capital spending plan more than 50 percent below last year’s budget.
Morgan Stanley is acting as the book-running manager for the offering, Marathon said.