July 27, 2021

DealBook: Apache to Buy Cordillera Energy for $2.85 Billion

A “fracking” operation near Big Wells, in which water and chemicals are injected deep underground to extract oil and natural gas.Michael Stravato for The New York TimesA “fracking” operation near Big Wells, Tex., in which water and chemicals are injected deep underground to extract oil and natural gas.

The independent oil and natural gas producer Apache Corporation agreed on Monday to acquire the privately held Cordillera Energy Partners for $2.85 billion, the latest deal centered on the controversial drilling technology known as hydraulic fracturing, or fracking.

The acquisition will give Apache, based in Houston, access to 254,000 acres of potential energy reserves in the Granite Wash, a region along the Texas-Oklahoma border that has received billions of dollars in investment in recent years. The area is known for its shale formations — sedimentary rock from which hard-to-recover natural gas and oil can be extracted using fracking.

The drilling technique, however, has been criticized by environmentalists and some politicians, who have raised safety concerns.

Apache will pay Cordillera’s investors, including the private equity firm EnCap Investments, $600 million in its own stock, with the remainder of the deal to be paid in cash funded through debt, Apache said in a statement.

Apache said it expected the acquisition to add to its earnings and cash flow this year, and that the future drilling program would be self-funded by 2013.

Despite concerns over fracking, Apache will gain control over estimated proven reserves of 71.5 million barrels of oil equivalent and current net production of 18,000 barrels of oil equivalent a day, according to the statement. Cordillera also has 14,000 potential drilling locations in the Anadarko Basin, a region that stretches from Texas and Oklahoma to Kansas and Colorado.

“This is an important growth step for Apache, a unique bolt-on opportunity that more than doubles Apache’s acreage in a highly liquids-rich fairway in the Anadarko Basin,” G. Steven Farris, Apache’s chief executive, said.

Apache has operations across North America and in international markets, including Egypt, Australia and Argentina. In recent years, the company has looked to increase it position in United States energy production to take advantage of new fracking technologies.

The sector has received a lot of investor interest. On Jan. 3, the French oil giant Total signed a $2.32 billion deal for a piece of the Chesapeake Energy Corporation’s shale operation in Ohio. The same day, Sinopec International Petroleum Exploration and Production reached a $2.2 billion agreement to buy a 30 percent stake in five Devon Energy shale operations.

Goldman Sachs and the law firm Tudor, Pickering, Holt Company advised Apache on the deal. Jefferies Company, J.P. Morgan Securities and the law firms Andrews Kurth and Thompson Knight advised Cordillera.

Article source: http://dealbook.nytimes.com/2012/01/23/apache-to-buy-cordillera-energy-for-2-85-billion/?partner=rss&emc=rss

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