Apache Corp. agreed to buy closely held Cordillera Energy Partners III LLC for $2.85 billion in cash and stock, adding to Oklahoma and Texas operations that use hydraulic fracturing to get oil and natural gas.
The acquisition will more than double Apache’s holdings in the Anadarko basin and add estimated proved reserves of 71.5 million barrels of oil equivalent, the Houston-based company said in a statement today. The purchase will be paid for with $2.25 billion in cash and $600 million of stock and includes 18,000 barrels a day of existing production.
The transaction is “fair at best” given that about half of the output from the acreage is gas, Leo Mariani, an Austin, Texas-based analyst at RBC Capital Markets, said in a telephone interview. “The ultimate price is $6,000 an acre and gas prices need to go up in the next few years for them to make money on this.”
Gas prices have dropped to 10-year lows as the increased use of horizontal drilling and hydraulic fracturing, or fracking, has boosted U.S. production. Fields that also produce crude and natural gas liquids, including propane, are more valuable since those fuels are tied to oil prices, which rose 8.2 percent in New York last year.
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