Apache, Mariner to merge in $2.7 billion deal
Houston independent Apache Corp. has signed a merger agreement with Mariner Energy Inc., also of Houston, in a cash and stock deal valued at $2.7 billion that will expand Apache’s operations in the deep waters of the Gulf of Mexico.
By OGJ editors
HOUSTON, Apr. 15 -- Houston independent Apache Corp. has signed a merger agreement with Mariner Energy Inc., also of Houston, in a cash and stock deal valued at $2.7 billion that will expand Apache’s operations in the deep waters of the Gulf of Mexico.
“This is a strategic step and a natural extension into the deepwater gulf for Apache,” said G. Steven Farris, Apache chairman and chief executive officer. Mariner also complements Apache’s operations on the gulf shelf and in the Permian basin.
Under the agreement, Mariner shareholders will receive 0.17043 of a share of Apache common stock and $7.80 cash for each outstanding share of Mariner's common stock, subject to an election feature and proration. In addition, Apache will assume $1.2 billion in debt.
In February, Mariner produced 63,000 boe/d from the gulf shelf and deep water, the Permian basin, and various unconventional onshore plays. At yearend 2009, Mariner estimated proved reserves of 181 million boe (47% liquid hydrocarbons) as well as unbooked resource potential of 2 billion boe.
Mariner's deepwater portfolio includes nearly 100 blocks, 7 discoveries in development—including interests in Lucius and Heidelberg—and more than 50 prospects.
“We have considered extending our Gulf of Mexico operations into the deep water for a number of years,” Farris said. “Mariner brings an inventory of developments and prospects that will jump-start our position in the deepwater gulf; Apache's financial resources will maximize the value of the portfolio.”
Farris said, “It's the right time because recent advances in seismic technology and continued enhancements in facilities design have reduced the risks in one of the world's most prolific oil exploration basins.”
Apache and Mariner teamed up in the 2008 deepwater Geauxpher discovery and development on Garden Banks Block 462. In addition to Geauxpher, Apache has drilled several deepwater discoveries in Egypt and Western Australia.
Mariner also has more than 240 blocks on the gulf shelf and more than 200,000 net acres across several emerging onshore plays. “Mariner's gulf shelf and Permian assets are both excellent fits with our existing core areas,” Farris said. “These fields provide strong cash flow, drilling inventory, and upside potential.”
The transaction is subject to approval by Mariner's shareholders and customary regulatory approvals. Completion of the transaction is expected in the third quarter.
Earlier this week, Apache agreed to acquire Devon Energy Corp.’s gulf shelf assets for $1.05 billion (OGJ Online, Apr 12, 2010).
That 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.