Apache Corporation (ticker: APA) is an oil and gas exploration and production company with operations in the United States, Canada, Egypt, the United Kingdom, Australia and Argentina. It is one of the world’s top independent E&P companies and recently celebrated its 50th anniversary.
Apache announced on September 18, 2013, the sale of certain oil and gas producing properties in Canada in two separate transactions with a combined value of US$112 million (CAN$117 million).
The company agreed to sell its Hatton, St. Lina, Marten Hills, Snipe Lake, Valhalla, and a portion of its Hawkeye producing properties. These are primarily dry gas development locations in Saskatchewan and Alberta and comprise approximately 4,000 operated and 1,300 non-operated wells that averaged 38 MMcf/d and 750 BOPD, condensate and natural gas liquids, net to Apache (Q2’13). According to APA’s Q2’13 report, total production in Canada is 520 MMcf/d and 18,573 BPOD. The sale amounts to approximately 7% and 4% of its Canada assets, respectively.
Last month, Apache announced the sale of the Alberta assets Nevis, North Grant Lands, and South Grant Lands. Both of the Canadian asset transactions have an effective date of April 1, 2013, and are expected to close during Q4’13.
APA’s Portfolio Adjustments
APA has generated $7.2 billion in asset sales since the company pledged to rebalance its portfolio following the release of its Q1’13 results.
On August 30, 2013, Apache sold 33% of its Egypt assets for $3.1 billion to Sinopec International Petroleum Exploration and Production Corporation, a wholly owned subsidiary of Sinopec Group (ticker: SNP). The two companies formed a joint operation, and APA continues its Egyptian operations and pursuit of upstream oil and gas projects through its exclusive partnership with Sinopec International.
On July 18, 2013, APA sold its Gulf of Mexico assets to Fieldwood Energy LLC, an affiliate of Riverstone Holdings, for $3.75 billion. Fleetwood assumed all asset retirement obligations for the properties, while Apache retained 50% of its ownership interest in all exploration blocks and in horizons below production intervals in the developed blocks. High-potential deep hydrocarbon plays in the area are currently being tested by APA.
Pro forma for the partnership with Sinopec International and the sale of Gulf of Mexico shelf assets, Apache’s Q2’13 production from North American onshore assets and from Egypt would have comprised approximately 55% and 15%, respectively. In 2010, onshore North America contributed 31% of Apache’s overall production, Egypt represented 25% and the Gulf of Mexico shelf represented 17 %.
APA’s initial portfolio goals included generating $4 billion from selling assets not ideal for its long term plan, using the revenue to buy back shares under a 30-million share repurchase program, and shift its focus toward assets with predictable growth rates and attractive rates of return. APA has now generated $3.2 billion more than anticipated, and its stock has climbed from $78.51 on the day of APA’s Q1’13 release on May 9, 2013, to $87.50 by market’s opening on September 23, 2013. The $8.99 boost is an 11% increase, and the closing price of $88.25 on September 18, 2013 is the highest the stock has been since September 21, 2012.
Rodney J. Eichler, President and Chief Operating Officer of Apache Corporation, said: “In Canada, Apache is focused on growing liquids production from a deep inventory of crude oil- and liquids-rich opportunities in Canada’s Western Sedimentary Basin. Our extensive remaining acreage in these areas can generate attractive rates of return and provide for more predictable production growth. We also remain focused on advancing the Kitimat LNG project to monetize large unconventional resources in the Liard and Horn River basins in northern British Columbia.”
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