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FTC Clears Apache's $1B Purchase of Permian Assets

The Federal Trade Commission (FTC) has given the green light to Apache Corp.'s bid to purchase from Anadarko Petroleum controlling interest in 28 oil and natural gas fields in the Permian Basin. The assets, in which Anadarko will retain a minor interest, are expected to produce 9,000 b/d of oil and 19 MMcf/d of natural gas net to Apache this year.

The Houston-based producer's proposed $1 billion purchase of a major interest in Anadarko's Permian Basin oil and gas assets cleared the Hart-Scott-Rodino waiting period on Feb. 12, with the FTC imposing no restrictions on the deal.

The 28 fields currently have about 3,950 wells in operation on 143,000 net acres, and nearly 90% of the properties are operated by Anadarko. More than 70% of the production is oil, primarily produced through water-flood enhanced oil recovery operations. Apache CEO G. Steven Farris said his company's expertise in improving mature assets will pay dividends down the road. Apache is earmarking $44 million on capital expenditures on the new assets, he said.

Apache expects to book 70 MMboe of net reserves in the deal, including 57 million bbl of oil and 78 Bcf of gas. The properties complement Apache's current Permian Basin operations, which have net production of 29,000 b/d of oil and 79 MMcf/d of gas. Most of the production is concentrated in eight operated fields, which consist of 81% proved reserves and 72% of the expected 2007 net production. Apache is paying about $14.27/boe for the proved reserves and $13.65/boe for the proved and probable reserves.

The transaction was first announced in late January and is expected to close before March 31. It will be funded with debt, according to the company. Apache will continue to be 55% weighted to gas.

The acquisition caps three huge U.S. deals made by Apache in a little over a year. Apache has paid a total of $2.085 billion to acquire 144.7 MMboe in the Permian Basin and offshore during the period. Last April, Apache paid BP plc $845 million for a group of Gulf of Mexico Outer Continental Shelf assets (see Daily GPI, April 20, 2006). And early last year, Apache completed a $240 million deal with Hess Corp. to obtain 30.5 MMboe in reserves in the Permian Basin.

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