NGI The Weekly Gas Market Report
Apache Corp. said last week its recent equity offering has raised net proceeds of $433.9 million to fund this year’s acquisitions, including Occidental Petroleum’s interests in the Gulf of Mexico. So far, the company has announced or completed cash acquisitions totaling $860 million this year alone.
Apache issued 9.2 million shares of common stock for $49 per share. Merrill Lynch & Co., Goldman Sachs & Co., Credit Suisse First Boston and Salomon Smith Barney managed the underwriting.
“We continue to look for opportunities to grow Apache for the benefit of our shareholders,” said CEO Raymond Plank. “Our contrarian strategy is paying off in a big way, with record production volumes coming at a time of high oil and gas prices.”
Plank said that annualizing the company’s first-half results sets Apache on track to record an 18% return on equity for shareholders. “While prices are not predictable, with these acquisitions, Apache’s production growth is assured through 2001.”
In July, Apache announced a two-part structured agreement to acquire an Occidental Petroleum subsidiary that owns interests on the Outer Continental Shelf of the Gulf of Mexico, and to acquire that subsidiary’s natural gas production for $385 million, a portion of which will be paid in future years (see NGI, July 24). Closing is expected by the middle of this month.
In June, Apache agreed to pay Collins & Ware Inc. $300 million for long-lived producing properties in the Permian Basin and South Texas (see NGI, June 19). Those assets have proved reserves of nearly 502 Bcfe, with one-third in liquid hydrocarbons. Probable reserves are estimated at 151 Bcfe, and current net production is 40 MMcf/d of natural gas and 4,000 B/d of liquid hydrocarbons. Earlier this year, Apache acquired some properties in Oklahoma and the Texas Panhandle from Crescendo Resources, an oil and gas producer.
The independent oil and gas producer reported that its second-quarter earnings had more than quadrupled, reflecting an increase in production and higher oil and gas prices. Net income rose to $140.4 million, or $1.19 per diluted share, up from $29.6 million, or $0.28 for the same period in 1999. Revenues rose to $448 million from $246 million. Frost Securities Inc. analyst Lewis Kreps said in late June that Apache was on track to “generate earnings growth of 31% over the next three years.”
Carolyn Davis, Houston
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