The properties are projected to produce 9,500 barrels of liquid hydrocarbons and 55 million cubic feet of gas per day (net) after closing – the same balance of liquids and natural gas in Apache’s current worldwide production. Closing is expected in early June.
Liquid hydrocarbons are also expected to contribute approximately 70% of the projected revenues from the acquired properties. About half of the estimated proved reserves of 41 million barrels equivalent are oil and natural gas liquids.
Projected daily production from the acquired assets for the remainder of 2010 equals 3% of Apache’s fourth-quarter 2009 worldwide daily production. When the transaction is completed, the Gulf Shelf’s share of Apache’s estimated worldwide production will be slightly less than 20%.
The acquired assets comprise 477,000 net acres across 158 blocks. The fields have 80 platforms and 211 production caissons in waters to 450ft deep. Seven major field areas hold 90% of the proved reserves. Devon operates 75% of the production. Based on initial evaluation, Apache has identified 79 recompletion opportunities and 26 drilling prospects across the acquired assets.
Apache will fund the acquisition primarily from existing cash balances supplemented with commercial paper. The company has hedged a portion of the production for three years using swaps and collars to protect the economics of the transaction, which is effective from January 1.
Completion of the transaction is subject to preferential rights to purchase held by the other working interest owners in the properties as well as customary closing conditions and regulatory approvals.
