Apache To Double Reserves with Amoco Acquisition
DENVER (AP) _ Apache Corp. will buy properties from Amoco Corp. in a $542.5 million deal that will double Apache’s oil and gas reserves, the companies announced Thursday.
Apache will pay Amoco $515 million, 2 million shares of Apache stock and other considerations to acquire the assets from Amoco Production Co. Apache stock closed at $13.75 per share Wednesday, making the 2 million shares worth $27.5 million.
The plan has been approved by both companies’ boards and is expected to be completed at mid-year.
It will give Apache new proven reserves of about 63 million barrels of oil and 288 billion cubic feet of natural gas. The agreement also includes secondary and tertiary recovery projects, four gas processing plants, leases on 285,000 developed acres and 730,000 undeveloped acres, and the right to access some of Amoco’s proprietary seismic and well data.
″This purchase affords us access to strategic opportunities such as horizontal drilling and enhanced oil recovery,″ said Raymond Plank, chairman and chief executive officer of Denver-based Apache. ″In addition, we better balance Apache and improve its profit margins as oil becomes a larger portion of our commodity mix.″
The properties represent less than 5 percent of Amoco’s proven U.S. reserves and less than 10 percent of its domestic production. The sale is part of the company’s ongoing portfolio management, Chicago-based Amoco said.
″Many of these properties are relatively small for a very large company to operate efficiently,″ said Amoco President Patrick J. Early. ″These properties are profitable but are higher-cost for us to operate than those remaining in our portfolio.″
The transaction will be underwritten by a loan approved by First Chicago Corp. and Chemical Bank.