U.S. energy firm,
), has decided to divest its Gulf of Mexico (GoM) Shelf assets
for a cash consideration of roughly $3.75 billion to Fieldwood
Energy LLC, a subsidiary of a private equity firm Riverstone
Holdings. 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.
APACHE CORP (APA): Free Stock Analysis Report
EPL OIL&GAS INC (EPL): Free Stock Analysis
MEMORIAL PRODUC (MEMP): Free Stock Analysis
MATADOR RESOURC (MTDR): Free Stock Analysis
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Additionally, Fieldwood will obtain all the future obligations
related to the asset retirement, which is estimated to be roughly
$1.5 billion. However, Apache will retain 50% stakes in all the
unexplored blocks. The transaction is expected to close by Sep
30, 2013, subject to customary and regulatory approvals. In the
transitional period, Apache will continue operating the assets.
Apache believes that this proposed sale will help it to rebalance
its portfolio and also generate shareholder's value. Moreover,
the transaction will enable Apache to reach closer to its goal of
selling properties of roughly $4.0 billion by the end of 2013.
The proceeds from this divestment will be used to lower Apache's
debt burden and to repurchase shares.
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
gas liquids. We like Apache's large geographically-diversified
reserve base, as well as its balanced exposure to natural gas and
crude oil, and multi-year trends in reserve replacement and
However, the company's long-term production and reserve growth
primarily depends on its acquire-and-exploit model. Apache may
find it difficult to complete accretive transactions in the
future, which could negatively impact its growth rate.
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 look at exploration and production firms like
EPL Oil & Gas Inc.
Matador Resources Co.
Memorial Production Partners LP
). All the firms sport a Zacks Rank #1 (Strong Buy).