U.S. energy firm Apache Corp. APA announced plans to exit its upstream Australian operations. The company added that it would sell its affiliate – Apache Energy Limited – to a group of private equity funds managed by Macquarie Capital Group Limited and Brookfield Asset Management Inc. Apache would receive $2.1 billion in cash for the deal.
Though the effective date of the transaction is Oct 1, 2014, the deal is likely to close by the middle of this year, subject to necessary closing conditions.
Apache added that production from its above-mentioned affiliate and its subsidiaries averaged about 49,000 barrels of oil equivalent per day in March.
With this sale, Apache will exit all its exploration and production business in Australia. Earlier this month, this company announced the sale of its Wheatstone LNG project for $2.8 billion to Woodside Petroleum Limited. The company now retains just a 49% stake in fertilizer producer Yara Pilbara Holdings Pty Limited.
Management at Apache added that the transaction is in accordance with its portfolio repositioning strategy. The company has directed focus toward onshore North America over the past few years through asset sales and purchases worth $17 billion each. Additionally, with this Australian asset sale, about 70% of the company’s production will now come from North America. Moreover, Apache’s North Sea and Egyptian operations complement its North American portfolio.
Houston, TX-based Apache is one of the world's leading independent energy companies engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. Apache has a large geographically diversified reserve base and multi-year trend in reserve replacement and production growth. However, being a firm in the exploration and production industry, Apache’s profitability is expected to take a beating in this weakly priced oil and gas market.
Currently, Apache carries a Zacks Rank #3 (Hold).
Better-ranked players from the oil and gas exploration and production industry include Range Resources Corporation RRC, Stone Energy Corp. SGY and WPX Energy, Inc. WPX. All these stocks hold a Zacks Rank #2 (Buy).
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