Did Marathon Oil Corp. (NYSE:MRO) overpay for properties in South Texas' Eagle Ford shale from a joint venture owned by Hilcorp Energy Co. and Kohlberg Kravis Roberts & Co. LP (NYSE:KKR)?

That was the question of the week around oil and gas circles, as folks digested the June 1 news that Marathon had agreed to buy the assets for $3.5 billion, which represented a 175% profit on KKR's year-old, $410 million investment.

Michael Bodino, an analyst at Global Hunter Securities LLC, wrote that the deal yielded a value of $23,300 per net acre after crediting back estimated costs of wells already drilled, "setting a new high-water mark for the play."

It was double the average of what properties fetched recently in the area.

Marathon's stock took a beating, slipping almost 3% the day the deal was announced and ending down 4.5% for the week. Talk around the Oil & Gas Investor conference in Houston on June 2, when another billion-dollar shale deal was announced between Malaysia's Petronas and Canada's Progress Energy Resources Corp. (Toronto:PRQ.TO), was of a "full scale boom" approaching the "white-hot" stage, maybe even a "bubble."

"People need to be careful. If you look at transactions, not all of them will be economic," said Thomas Edelman, an oil and gas entrepreneur who now manages private equity firm White Deer Energy LP. He was one of three contrarians on the closing panel. "People will keep pushing this until the industry tips over."

Philip Adams, of bond research firm Gimme Credit LLC, said the deal didn't look terribly expensive. He said he agrees with Marathon that the "shorthand" way of evaluating the deal on a dollars-per-acre basis -- which is often calculated for largely undeveloped property -- is "inappropriate," given the variability in liquids content, and therefore the economics, across the play. "One flippant observation might be that if KKR is selling, the price must be too high," he quipped.

On a dollars-per-proved reserves basis, however, Marathon is paying about $35 per barrel, and if the 500 million barrel resource estimate should prove true, then the acquisition cost will have been just $7 per barrel.

"Moreover, [Marathon] intends for this particular acquisition to self-fund its capital requirements by 2014 (at about $1 billion), becoming increasingly cash positive thereafter," he wrote. "So while this is a very long-term investment (and precludes the share buyback some wanted), we can't prove [Marathon] overpaid."

Importantly, Marathon will also get six rigs, with five more on order and estimates that 20 to 24 rigs will be deployed over the next 12 to 18 months with the two dedicated fracking crews needing to double, maybe triple, Gimme Credit said. As a result of the deal, Marathon boosted its production growth guidance by 2% to 5% to 7% between 2010 and 2016 and its expected capital expenditures by $1 billion to $4.5 billion to $5 billion, with the Hilcorp/Eagle Ford portion accounting for $750 million next year and $1 billion or more for each of the next four years.

Marathon also expects synergies in capital allocation within its combined Eagle Ford acreage, directing drilling capital to the highest return locations first, perhaps freeing up capital for bolt-on acquisitions, Gimme Credit said. Marathon reiterated its capital discipline, with investment largely funded by cash flow, a 20% to 25% net debt/capital ratio and strong, investment-grade ratings. "We like this acquisition," the report said.

So maybe KKR and Marathon both walked away from the table happy, but some folks are still concerned that the shale M&A market may have become a little overheated.