Apache Continues GoM Grab With Buyout of ME for $2.7B
[Unlike the APA-DVN deal, which was an asset purchase of shallow-water GoM projects, the APA-ME deal is an acquisition of the whole company and the bulk of the acquired assets are deepwater.]
›APRIL 16, 2010 By BEN CASSELMAN And ANGEL GONZALEZ
Apache Corp. will acquire smaller rival Mariner Energy Inc. for $2.7 billion in a deal that will create the largest U.S.-based independent oil-and-gas producer.
The cash-and-stock deal will give Houston-based Apache its first foothold in the deep-water Gulf of Mexico, which has become a major focus of exploration for big oil companies. The acquisition is Apache's second in the past week. On Monday, the company said it would buy shallow-water Gulf of Mexico assets from Devon Energy Corp. for $1.05 billion.
Apache's buying spree highlights a sudden boom in oil-patch deals as bigger, more financially stable oil companies snap up assets from cash-strapped rivals.
In December, Exxon Mobil Corp. said it would buy XTO Energy Inc. for $31 billion. More recently, Chinese oil company Sinopec agreed to pay $4.65 billion for Canadian oil-sands assets owned by ConocoPhillips.
Most of those and other recent deals, however, involved big international companies buying into onshore oil-and-gas fields in the U.S. and Canada. Many analysts had expected a similar move from Apache. But Apache has long rejected such deals as too expensive.
Instead, Apache is buying Mariner, a company that gets 85% of its oil and gas from the Gulf of Mexico.
The deal, Apache's first corporate acquisition in 14 years, cements the company's position in the shallow waters of the Gulf and gives it a chance to break into deep-water exploration, where it has little experience.
"This is a very important strategic step for Apache," Chief Executive Steven Farris said. "This is the right time for us to enter the deep water."
Mr. Farris said the deal will make Apache the biggest U.S. independent oil producer, a category that includes Devon and Anadarko Petroleum Corp.[The “independent” label is getting sillier, IMO.]
Mariner, also based in Houston, is one of a handful of smaller companies to embrace deep-water projects, which are more often the province of international giants because of their vast expense and years-long development times.
But while offshore projects are risky and expensive, they can be hugely profitable. Anadarko, which is similar in size to Apache, has had a string of high-profile successes in the Gulf of Mexico, Africa and Brazil. Mr. Farris said Apache will "never be a primarily deep-water player" but new technologies have made such fields more attractive than in the past. "This wasn't a knee-jerk decision," Mr. Farris said.
The deal values Mariner's shares at $26.22, a 45% premium to Wednesday's closing price, on top of the near-doubling the stock has seen the past year.‹
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