Apache Corp. and its partner Shell Overseas Holdings Ltd. are expected to get the go ahead this week from the New Zealand High Court on whether to proceed with closing their acquisition of New Zealand-based Fletcher Challenge Energy. The partners won the overwhelming approval of Fletcher’s shareholders in a special meeting Tuesday, garnering 96% of the vote. In the deal, Houston-based Apache will acquire Fletcher’s Canadian and Argentina assets for about $630 million.
Apache COO G. Steven Farris said the acquisition, when completed, will be additive to the company’s earnings per share and cash flow per share. “It builds upon our strategic position in western Canada and provides Apache an entree into South America,” he said. When the acquisition closes, Shell will become New Zealand’s dominant energy producer.
With the Fletcher properties, Apache would add 713 Bcfe of natural gas, or about 12% to Apache’s current proven reserve base (see NGI, Oct. 16, 2000). Nearly three-quarters of the proven Canadian reserves are natural gas, and a third of those reserves rest in the Hatton field, which now produces 35 MMcf/d.
Overall, current production from the new Canadian properties averages 130 MMcf/d, 670 b/d of natural gas liquids, and 12,200 b/d of oil. In the Hatton field alone, Apache expects to drill nearly 100 wells a year for the next few years.
The approval last week followed a late February bid by Peak Petroleum Co. of New Zealand Ltd., a consortium of investors that include Penn West Petroleum Ltd., Greymouth Petroleum Mining Co., and investment houses FR Partners Ltd. and Guinness Peat Group Plc (see NGI, March 5). Peak had an offer on the table to outbid Shell and Apache by about 4%, but Fletcher officials thought the offer held no water because no monetary deal had actually been put together.
Carolyn Davis, Houston
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