Apache Corp to sell Gulf of Mexico shelf assets to Fieldwood Energy for $3.75 bn

Apache Corp, a Texas-based independent oil and gas company, yesterday agreed to sell its Gulf of Mexico shelf assets for $3.75 billion to Fieldwood Energy, a company backed by private equity firm Riverstone Holdings.

The sale involves one of the company's biggest energy exploration blocks in the Gulf of Mexico, which has produced more oil and gas in the shallow part of this region than any of its competitors.

Apache, which has spent around $16 billion in the past three years in buying oil and gas assets, said that the sale is part of its earlier announced plans to divest $4 billion in assets by the year-end in order to focus on its more recently acquired assets.

The company intends to use the sale proceeds to reduce debt, enhance financial flexibility and to repurchase shares under a 30-million-share repurchase programme.

Apache's Shelf assets, the largest in the Gulf of Mexico, comprises more than 500 blocks with 1.9 million acres having estimated proved reserves of 133 million barrels of oil and natural gas liquids and 636 billion cubic feet of natural gas.

In the first quarter of 2013, the fields averaged net production of around 50,000 barrels of liquid hydrocarbons and 254 million cubic feet of natural gas per day.

Under the terms of the sale, Fieldwood will assume approximately $1.5 billion asset retirement obligations for these properties.

Apache will retain 50 per cent of its ownership interest in all exploration blocks and in horizons below production in developed blocks, where high-potential deep hydrocarbon plays are being tested.

"This transaction is an important step toward rebalancing our portfolio," said Steven Farris, chairman and CEO of Apache. "At the end of this process, we expect Apache to have the right mix of assets to generate strong returns, drive more predictable production growth, and create shareholder value.

With a market cap of $32 billion, Apache produces oil and natural gas through operations in the US, Canada, the UK part of the North Sea, Egypt, Australia and Argentina.