Apache to Offer $2B Notes - Analyst Blog


Shutterstock photo

U.S. energy firm Apache Corporation ( APA ) recently announced that it will be offering $2.0 billion of notes. The offering is divided into two parts - $1.2 billion 2.625% notes due 2023 and $800 million 4.25% senior notes due 2044.

The public offering will fetch approximately $1.97 billion after deducting underwriting discounts and offering expenses. The net proceeds from this offering will be utilized for the repayment of outstanding commercial paper borrowings and other corporate purposes.

Apache expects the proceedings to be complete on December 3, 2012, subject to the fulfillment of customary closing conditions.

Apache Corporation ended the third quarter of 2012 with long-term borrowings of $10,670 million. The debt-to-capital ratio was 25.8% at quarter end. With the issuance of $2.0 billion of debt, the debt-to-capital ratio will increase to 29.2%.

Founded in 1954, 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.

Apache is noted for growing through acquisitions and the development of existing reserves. Its long-term production growth visibility improved significantly  following the recent BP Plc ( BP ) asset acquisition; the purchase of a portion of Devon Energy Corporation 's ( DVN ) Gulf of Mexico assets and the deal to acquire Mariner Energy. These new acreage positions further complement the company's diversified asset base.

However, the company's long-term production and reserve growth primarily depend 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 holds a Zacks #3 Rank, equivalent to a Hold rating for a period of one to three months. Longer term, we maintain our Neutral recommendation on the stock.

APACHE CORP (APA): Free Stock Analysis Report

BP PLC (BP): Free Stock Analysis Report

DEVON ENERGY (DVN): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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
More Headlines for: APA , BP , DVN

More from Zacks.com




Equity Research
Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com