Keeping with the company’s self-imposed completion date, Houston-based Apache closed the deal on its previously announced $385 million acquisition of an Occidental Petroleum subsidiary (see NGI, Aug. 7).

The subsidiary which owns interests on the Outer Continental shelf of the Gulf of Mexico will be financed under a two-part agreement. Part of the cost will be paid up front, and the remaining cost will be paid for in future years. Included in the sale, are properties in 32 fields, half of them operated, on 93 blocks with total proved reserves of 56.8 million barrels of oil equivalent.

Net production of the properties through yearend are expected to yield an average of 107 MMcf/d and 7,800 bbl of oil a day. The proved reserves have an estimated six year reserve life. Also included are proprietary 3-D seismic data on 113 blocks that cover about 1,022 square miles.

“These are excellent assets with upside potential we can realize through the drill bit,” said G. Steven Farris, Apache’s president. He said most of the acreage is “near or adjacent to Apache blocks and complements our existing 3-D seismic data and operations.”

Apache says that it has “protected the economics of the transaction with “collar” hedges, which preserve the potential for significantly higher gas-price realizations.” The purchase of Occidental’s interests is expected to add immediately to Apache’s per-share earnings and cash flow.

The independent oil and gas producer will pay Occidental $341 million for the properties this year, then pay $11 million a year for the next four years.

Alex Steis

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