Apache to acquire Occidental's Gulf of Mexico interests

Houston-based Apache Corp. continued its recent acquisition trend Thursday when it announced it's acquiring for $385 million cash the Gulf of Mexico interests of a subsidiary of Occidental Petroleum Corp., Los Angeles. Apache will acquire interests in 32 fields, half of them operated, on 93 blocks on the Gulf of Mexico's Outer Continental Shelf. Total proven reserves are 56.8 million boe.


Houston-based Apache Corp. continued its recent acquisition trend Thursday when it announced it's acquiring for $385 million cash the Gulf of Mexico interests of a subsidiary of Occidental Petroleum Corp., Los Angeles.

Apache will acquire interests in 32 fields, half of them operated, on 93 blocks on the Gulf of Mexico's Outer Continental Shelf. Total proven reserves are 56.8 million boe. Included in the deal is proprietary 3D seismic data on 113 blocks covering 1,022 sq miles.

The acquisition expands Apache's presence in the Outer Continental Shelf. Much of the acreage is near or adjacent Apache's existing blocks and compliments its existing 3D seismic data and operations. The new acreage includes Grand Isle 43, Matagorda 620 and 638, Brazos A-133, and Mobile A-23, which make up 65% of the total value of acreage and reserves, said a company spokesman.

Apache has identified 50 drilling locations and 150 behind-pipe recompletion opportunities.

"These are excellent assets with upside potential we can realize through the drill bit," said G. Steven Farris, president and COO of Apache.

So far this year, Apache has announced or completed cash acquisitions totaling $860 million. Its most recent acquisitions include the January purchase of western Oklahoma and Texas Panhandle assets from Crescendo Resources LP, Amarillo, Tex.; and the June acquisition of South Texas and Permian basin assets for $320 million from Collins & Ware Inc., Midland, Tex. (OGJ Online, June 14, 2000).

These acquisitions have added reserves of 184 million boe at a cost of $4.67/boe. They also add production of 190 MMcfd of gas and 14,000 b/d of liquids.

Apache estimates net production from the Occidental properties through the end of 2000 to average 107 MMcfd of gas and 7,800 b/d of oil. It also estimates the proven reserves to have a 6-year life.

Expected to close Aug. 15, the Occidental acquisition will add immediately to Apache's per-share earnings and cash flow. Apache also said it plans to offer 7 million shares of common stock through underwriters to pay down short-term debt incurred with Apache's year 2000 acquisitions. The underwriters will be managed by Merrill Lynch & Co., Goldman Sachs & Co., Salomon Smith Barney Inc. and Credit Suisse First Boston.

Following announcement of the deal, Moody's Investors Service, New York, confirmed Apache's Baa1 senior unsecured debt rating and deemed the ratings outlook stable.

"Apache has a successful history of acquiring and exploiting properties which fit its areas of geological expertise, with debt reduction on a timely basis through equity transactions, property consolidations, and enhancement of production and cash flow," said Moody's. "Moody's ratings also incorporate the expectation that Apache will continue to benefit from competitive reinvestment economics for the acquisition, development, and production of oil and gas reserves."

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