Apache Completes Permian Asset Buy - Analyst Blog

U.S. energy firm Apache Corp. (APA) closed the previously-announced acquisition of beleaguered oil giant BP Plc’s (BP) Permian Basin assets in West Texas and New Mexico for approximately $3.1 billion. The assets include oil and gas operations, acreage and infrastructure.

The transaction is part of a broader agreement between the two companies whereby BP – the financially troubled U.K. major – will offload $7 billion worth of oil and gas assets in the U.S., Canada and Egypt to Apache to help pay for the cleanup of the Gulf of Mexico oil spill.

In addition to the Permian Basin properties, the assets to be sold include BP’s exploration business in western Alberta and British Columbia in Canada (for $3.25 billion), as well as oil and gas assets in Egypt’s Western Desert (for $0.65 billion). The completion of the Canadian and Egyptian transactions are subject to regulatory approvals, among other conditions.

Under the Permian Basin deal, Apache received 10 field areas that hold an estimated 141 million barrels of oil equivalent in proved reserves (65% liquids) with the potential to add 15,110 barrels of liquids and 81 million cubic feet of gas to the company’s daily production. Additionally, the transaction consists of 1.7 million gross acres (of which 405,000 acres represent substantial new drilling opportunities) and two operated gas processing plants.

Apache financed the deal with cash, debt and equity offerings. However, BP will continue to operate the properties on behalf of Apache through November 30.

Founded in 1954, Houston, Texas-based Apache is one of the world’s leading independent energy companies engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids.

Apache shares are currently rated as Zacks #3 Rank (‘Hold’), implying that the stock is expected to perform in line with the broader U.S. equity market over the next one-to-three months. This is supported by our long-term Neutral recommendation.