Apache to acquire Devon’s GoM shelf assets

Offshore staff

HOUSTON -- Apache is acquiring Devon Energy’s oil and gas assets on the Gulf of Mexico shelf for $1.05 billion. The transaction, expected to close in June, includes 477,000 acres across 158 blocks (including 51 producing blocks) offshore Texas, Louisiana, and Alabama. The fields have 80 platforms and 211 production caissons in waters to 450 ft (137 m) deep.

During 2009, Devon's production from the Gulf of Mexico shelf was approximately 62 MMcf/d of natural gas and 9,000 b/d of liquids. As of Dec. 31, 2009, Devon's reported estimated proved reserves included 144 bcf of natural gas and 15 MMbbl of liquids associated with the assets being purchased.

"Devon's exit from the Gulf of Mexico creates a great opportunity for Apache to add one of the best remaining shelf asset portfolios to our existing core area," says G. Steven Farris, Apache's chairman and CEO.

Projected daily production from the acquired assets for the remainder of 2010 equals 3% of Apache's 4Q 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%.

"These are well-maintained, high-quality assets that fit well with Apache's existing infrastructure and play to the strengths that come with our experience operating on the shelf - exploiting the current production base and capturing the upside potential," adds Jon Jeppesen, executive VP and leader of Apache's Gulf Coast Region. "Many of these properties are geologically complex fields that contain large structures with multiple pay intervals that we believe are under-exploited. The prospect inventory includes high-potential trend exploration opportunities in the Norphlet play and highly prospective exploratory acreage off the Texas coast."

Based on initial evaluation, Apache says it has identified 79 recompletion opportunities and 26 drilling prospects across the acquired assets.

For Devon, the sale brings it a step closer to its objective to be a focused North America onshore player. The company says the proceeds will be allocated between the acceleration of development of its North American onshore properties, debt reduction, and share repurchases.

Devon has now announced the sale of the majority of the divestiture assets. In March, BP and Devon Energy signed a $7 billion agreement whereby BP would acquire all of Devon’s deepwater Gulf of Mexico, Brazil, and Azerbaijan assets.

Data rooms for the remaining international assets are currently open. Devon expects the closings of all divestitures to be completed prior to year-end.

4/12/2010