U.S. energy firm
) has decided to stop exploring the offshore oil block in Kenya
for hydrocarbons. The company will leave the East African country
and is expected to look for other commercially viable projects
with better prospects.
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Last year, Apache gave up 50% of its ownership in L8 Block,
located off the coast of Kenya. Tullow Oil plc of Britain and
Pancontinental of Australia partnered Apache in the block. In the
same time period, Apache also stopped operating the Mbawa-1 well
of the block as it was unable to get commercially viable output
of natural gas.
In order to focus on core operations, Apache has been divesting
non-core assets. Moreover, the company's year-to-date divestment
proceeds now stand at around $7.0 billion. Apache is planning to
use the realizations to increase its financial flexibility, trim
down debt, to buy back shares and generate funds for investment
in projects with high growth potential.
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
We like Apache's large geographically-diversified reserve base,
as well as its balanced exposure to natural gas and crude oil,
and multiyear trends in reserve replacement and production
growth. This allows management to allocate capital and resources
to high-return projects.
However, as is the case with other independent exploration and
production companies, Apache's results are directly exposed to
oil and gas prices, which are inherently volatile and subject to
complex market forces.
Apache currently retains 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 look at better performing oil and gas
exploration and production firms like
Swift Energy Co.
Matador Resources Company
Stone Energy Corp.
) that offer value. All the stocks sport a Zacks Rank #1 (Strong