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An overview of Apache Corporation’s oil and gas asset sales

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Apaches Corporation’s asset sales

On November 20, 2014, Apache Corporation (APA) announced the sale of its oil and gas assets in Louisiana and certain parts of the Anadarko Basin. There will be two separate transactions to sell the assets, from which the company will receive a combined total of $1.4 billion. Asset Map

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A snapshot of Apache Corporation’s operations

Before going into the details of the transactions, we’ll look at Apache Corporation’s business and assets base to better understand the rationale behind the sales.

Apache Corporation, or APA, is a Texas-based energy upstream company. It engages in the exploration, development, and production of natural gas, crude oil, and natural gas liquids (or NGL). The company has operations in five countries—the US, Canada, Egypt, Australia, and the United Kingdom’s North Sea.

In North America, APA is focused on building onshore acreage and divesting its offshore business. The company has also expressed its intention to exit some of its foreign operations, including the Wheatstone and Kitimat LNG projects in Canada.

Other energy companies increasing onshore operations in the US include Exxon Mobil Corporation (XOM), EOG Corporation (EOG), Hess Corporation (HES), and Devon Energy Corporation (DVN). Some of these companies are components of the Energy Select Sector SPDR ETF (XLE).

Current production

Average daily production in 3Q14 totaled 637,000 barrels of oil equivalent (or Mboe), a decrease of 105 Mboe over 3Q13. The decline was mostly on account of the company’s Gulf of Mexico Shelf and Canada assets divestment in 2014.

Acreage and reserves

By the end of 2013, APA had 10.1 million gross onshore acres in North America. The company’s proved reserves were 1.7 billion barrels of oil equivalent, and it had 13.1 billion barrels of oil equivalent of undeveloped reserves. Its North American onshore operations are primarily located in the Permian Basin, central US, the Gulf Coast, and Canada.

Read the next part of this series for details about the assets APA proposes to divest.

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