Apache to acquire Devon's Gulf of Mexico shelf assets

By OGJ editors
HOUSTON, Apr. 12 -- Houston independent Apache Corp. reported it has agreed to acquire Devon Energy Corp.’s shelf assets in the Gulf of Mexico shelf for $1.05 billion.

The agreement covers 158 blocks covering 477,000 net acres—including 51 blocks that are producing—owned by Devon off Texas, Louisiana, and Alabama. Devon operates 75% of the production. The fields have 80 platforms and 211 production caissons in 450 ft of water.

The properties are projected to produce 9,500 b/d of liquid hydrocarbons and 55 MMcfd of natural gas (net) after closing, which is expected in early June. Apache estimated net proved and probable reserves from the assets at 83 million boe at yearend 2009. Seven major field areas hold 90% of the proved reserves.

Liquid hydrocarbons also are expected to contribute more than 70% of the projected revenues from the acquired properties. About half of the estimated proved reserves of 41 million boe are oil and natural gas liquids.

Based on initial evaluation, Apache has identified 79 recompletion opportunities and 26 drilling prospects across the acquired assets.

“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,” said G. Steven Farris, Apache's chairman and chief executive officer.

“These are well-maintained, high-quality assets that fit well with Apache's existing infrastructure and play to the strengths that come with our experience operating on the shelf—exploiting the current production base and capturing the upside potential,” said Jon Jeppesen, executive vice-president and leader of Apache’s Gulf Coast region.

Jeppesen added, “Many of these properties are geologically complex fields that contain large structures with multiple pay intervals that we believe are underexploited.”

Larry Nichols, Devon chairman and chief executive officer, said of the company’s divestiture: “When we first announced our plans to reposition Devon, we expected total aftertax proceeds of between $4.5 and $7.5 billion. This sale of the remaining Gulf of Mexico assets, combined with our previously announced divestitures of $8.3 billion, ensures that we will exceed the upper end of that range. Furthermore, we are pleased to have a single purchaser for the shelf assets with the financial strength and experience of Apache.”