By OGJ editors
HOUSTON, July 7 -- Apache Corp. bought $200 million of oil and gas properties on the Gulf of Mexico Outer Continental Shelf from Shell Exploration & Production Co.
The two-pronged deal involved 26 mature, shallow-water properties in the Gulf of Mexico covering 50 blocks and interest in two gas condensate-separate plants.
Shell also received $300 million from Morgan Stanley in the form of a volumetric production payment. The New York investment bank will receive 68.4 bcfe during 4 years.
The total price was equivalent to $12/ boe on a proved reserves basis, Shell said. The sale was effective July 1.
The properties included 107 active wells and 17 production platforms and existing production handling agreements. Net production is 29,000 boe/d, of which 76% is gas, Shell said.
The New York-based Standard & Poor's Rating Services said the deal would not affect its rating or outlook on Apache. Meanwhile, Shell said the deal was part of its portfolio upgrade, averaging $2 billion/year of divestments.
Apache CEO and Pres. G. Steven Farris said, "These assets lay down well with our existing Gulf of Mexico properties. We will not have to add additional staff and we expect to create efficiencies in our field operations. The Gulf Coast enjoys the highest netback natural gas pricing in North America. With the current shortage of natural gas, we are hopeful of adding production to help bring on new supplies."
Farris said the assets have been "capital-constrained for several years. Just as with the Gulf of Mexico property package we purchased from Shell in May 1999, we plan to invest money to maximize production and add new reserves."
In the 1999 transaction, Apache paid Shell $716 million and has invested another $550 million in exploitation activities. By Dec. 31, 2002, Apache recouped 91% of its investment and still had 74% of the proved reserves that it booked at the time of the acquisition, Farris said.
