Apache Closes GoM Stake Sale for $1.4B - Analyst Blog

By Zacks Equity Research,

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U.S. energy firm Apache Corp. ( APA ) has announced the completion of sale of its interests in deepwater Gulf of Mexico projects to an oil and gas subsidiary of the mineral explorer, Freeport-McMoRan Copper & Gold Inc. ( FCX ). The sale was valued at $1.4 billion. The company had previously mentioned that the transaction was effective from May 1.

Apache has sold its non-operated interest in the Lucius and Heidelberg development projects, in addition to 11 deepwater exploration blocks. Freeport-McMoRan has acquired 51.2% of Apache's 11.7% interest in the Lucius oil development project and full 12.5% working interest in the Heidelberg development project.

Houston, TX-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's large geographically-diversified reserve base, balanced exposure to natural gas and crude oil, and its multiyear trends in reserve replacement and production growth are positives for the company. Additionally, a strong balance sheet helps the company to capitalize on investment opportunities and strategic acquisitions, thereby further improving growth.  

However, there is limited upside potential for the stock, given Apache's sensitivity to gas/oil price volatility, its drilling results, geo-political risks and project timing delays.

In keeping with these views, Apache currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.        

Meanwhile, one can consider better-ranked players from the oil and gas exploration and production industry like Encana Corp. ( ECA ) and EQT Corp. ( EQT ). Both these stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: FCX , APA , EQT , ECA

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