Apache Seals Non-Core Assets Sale - Analyst Blog

By Zacks Equity Research,

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U.S. energy firm Apache Corp. ( APA ) reported the closure of its previously announced divestment plan of Gulf of Mexico (GoM) Shelf assets. Apache sold the properties to Fieldwood Energy LLC, a subsidiary of a private equity firm Riverstone Holdings, for a cash consideration of roughly $3.75 billion. The properties span over 1.9 million acres, with proved reserves of 133.0 million barrels of liquids and 636.0 billion cubic feet of natural gas.

Moreover, Fieldwood will take care of all the future obligations related to the asset retirement, which is estimated to be roughly $1.5 billion. However, Apache will hold 50% stakes in all the unexplored blocks.

Apache also declared the completion of the sale of oil and gas plays in western Alberta, Canada. Apache divested the assets to privately held Canadian natural gas producer, Ember Resources, for a consideration of $214 million.

We view the asset disposal as Apache's attempt to focus on core operations. Considering Apache's recent sale of oil and gas properties in Gulf of Mexico, Canada and Egypt, the company's year-to-date divestment proceeds now stand at around $7.0 billion. Apache plans 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 potentials.

Houston, Texas-based Apache, which is engaged in the exploration, development and production of gas and liquids, currently holds 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 Anadarko Petroleum Corp. ( APC ), Matador Resources Co. ( MTDR ) and Stone Energy Corp. ( SGY ) that offer value. All the stocks sport a Zacks Rank #1 (Strong Buy).

APACHE CORP (APA): Free Stock Analysis Report

ANADARKO PETROL (APC): Free Stock Analysis Report

MATADOR RESOURC (MTDR): Free Stock Analysis Report

STONE ENERGY CP (SGY): Free Stock Analysis Report

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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: APA , APC , MTDR , SGY

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