Apache Corp. will increase its oil reserves five-fold with a deal to acquire producing properties and other assets in Alberta, British Columbia and Saskatchewan, Canada with proved reserves of 87.5 MMBoe from Shell Canada Limited for $524 million. The deal follows one made earlier this year with Shell for Gulf of Mexico assets that more than doubled Apache’s gas and oil production.

The Canadian purchase, through Apache’s wholly-owned subsidiary Apache Canada Ltd., also includes 294,294 net acres of undeveloped lease holdings, 100% interest in a gas processing plant with a potential capacity of 160 MMcf/d, and 52,700 miles of 2-D seismic and 884 square miles of 3-D seismic, ranking among the largest proprietary seismic data banks in Canada.

At the end of 1998, Apache’s proved net oil reserves were 11.9 million barrels, said spokesman Bill Mintz. Proved net gas reserves were 330 Bcf. The Canadian properties acquired from Shell add proved reserves of about 67 MMbbl crude oil, 5.8 MMbbl of natural gas liquids and 88 Bcf of gas. The deal will be effective Nov. 1 and is expected to close no later than Nov. 30, subject to U.S. and Canadian regulatory approvals.

Apache plans to fund the purchase from its $1 billion global credit facility, bringing the company’s debt-to-capitalization ratio to an estimated 42%. Apache said the acquisition is expected to add immediately, on a per-share basis, to its reserves, production, earnings and cash flow.

“This is a strategic step for Apache in Canada,” said G. Steven Farris, president. “With its quality production, large prospective acreage position and proprietary seismic data base — along with the unprecedented opportunity to add a quality team of Shell technical personnel — this acquisition transforms our Canadian region into a substantial growth area.”

Apache CEO Raymond Plank said, “Including this transaction, we’ve acquired about US$1.4 billion in assets this year. We believe there is an unprecedented opportunity to buy quality North American properties, and Apache intends to remain a significant player.”

In May Apache Corp. dramatically grew its asset base when it bought 22 fields in the Outer Continental Shelf of the Gulf of Mexico (GOM) from Shell for $715 million and one million common shares of stock (see NGI May 3).

Joe Fisher, Houston

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