The Apache Corporation said Monday that it would acquire Devon Energy’s oil and gas assets in the Gulf of Mexico for $1.05 billion, an amount that is about $250 million more than some analysts had expected. The deal expands Apache’s presence in the region and gives Devon the cash it needs to concentrate on its land drilling operations.
The purchase price drops to a net $840 million after stripping out the capital gains taxes that Devon will pay for the property, Fadel Gheit, an oil analyst at Oppenheimer, told Dealbook. “Apache is the biggest producer on that shelf and the deal makes a lot of sense for them,” he said.
Devon decided in November to sell its offshore and international oil and gas assets to focus on its less-expensive businesses in the United States and Canada. Last month, Devon sold some of its offshore properties in Brazil, the Gulf of Mexico and Azerbaijan to BP for $7 billion in cash.
“Devon’s exit from the Gulf of Mexico creates a great opportunity for Apache to add one of the best remaining shelf asset portfolios to our existing core area,” G. Steven Farris, Apache’s chairman and chief executive, said in a statement. “At 3.7 times estimated cash flow, this transaction is immediately additive to Apache’s per-share earnings and cash flow.”
Devon will spend $4.4 billion in 2010 on exploration, with 40 percent slated for unconventional natural gas production, according to PLS, an energy data provider. The company also plans to pay down about $3.5 billion in short-term debt.
The sale of Devon’s remaining Gulf of Mexico assets on Monday curbed speculation of further Chinese expansion in the region. In December, the China National Offshore Oil Corporation, or Cnooc, acquired a small stake in four oil fields in the Gulf of Mexico from Statoil of Norway.‹
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