Apache Acquires 14 GoM Leases - Analyst Blog
02 Aprile 2013 - 5:50PM
Zacks
U.S. energy firm Apache
Corp. (APA) recently claimed 14 leases in the central
region of the U.S. Gulf of Mexico (GoM) in an auction under the
U.S. Bureau of Ocean Energy Management. The addition will fortify
its already significant foothold in the region.
Apache was apparently the highest bidder in nine shallow water
blocks and five deepwater blocks in the lease sale. The auction
took place in New Orleans and received 407 bids from 52 companies
on 320 tracts.
Among the nine shallow water blocks, Apache formed joint ventures
on seven in the Main Pass area as an operator and held 75% working
interest in the same. Apache holds 100% working interest in the
remaining two shelf leases.
In each of the five deepwater blocks – which were acquired in
DeSoto Canyon, Green Canyon and Mississippi Canyon lease areas –
Apache holds 50% working interest.
The company spent $2.2 million for the shelf and $24.6 million for
deepwater blocks. With this addition, Apache will get hold of over
500 leases in the GoM region in total.
Apache currently carries a Zacks Rank #3 (Hold), implying that it
is expected to perform in line with the broader U.S. equity market
over the next 1 to 3 months.
We think Apache is in a better position to weather the current
uncertain environment than many of its peers in the exploration and
production space, given its solid production growth outlook, strong
financial health and diversified asset base.
However, Apache’s long-term production and reserve growth primarily
depends on its acquire-and-exploit model. Apache may find it
difficult to complete accretive transactions in the future, which
could negatively impact its growth rate.
Meanwhile, there are other energy explorers that offer value and
are worth buying now. These include Range Resources
Corp. (RRC), EPL Oil & Gas Inc. (EPL)
and Plains Exploration & Production Company
(PXP). All these firms sport a Zacks Rank #1 (Strong Buy).
APACHE CORP (APA): Free Stock Analysis Report
EPL OIL&GAS INC (EPL): Free Stock Analysis Report
PLAINS EXPL&PRD (PXP): Free Stock Analysis Report
RANGE RESOURCES (RRC): Free Stock Analysis Report
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