Apache Unfazed by Huge Oil Investments

The year 2010 saw Apache Corporation topping all other U.S. firms engaged purely in oil and natural gas exploration.  During said year, its market value was pegged at more than $35 billion.

At present, Apache’s market value is around $33 billion. Some suggest that it may have overspent when it acquired $16 billion worth of oil assets in a span of three years.

Apache, however, maintains that its oil investments could help the company attain an almost 30 percent increase in production at the close of 2016, although some skeptics fear it is going to be a big challenge for the company.

A fund manager from a Houston investment advisory firm said he still believes that the company can generate earnings from these investments, but Apache must show some encouraging signs that it will achieve its goals.

Robert Dye, one of Apache’s SVPs, acknowledged that the company did invest heavily in the past years but it is well on its way to implementing plans that would help them realize gains from these investments.  The company will be actively drilling this year in regions like Western Oklahoma and the Permian Basin. Meanwhile, long-term plans include more drilling in Australia and in Canada.

From 2010 up until last month, Apache actively purchased oil assets to the tune of $16 billion.

In January 2010, it made investments in the Kitimat LNG exporting venture in Canada.  By the second quarter of the same year, it bought some of Devon Energy Corporation’s oil assets located in the Mexican Gulf and even acquired Mariner Energy Incorporated which also owned properties in the same area.  By next quarter, it purchased BP Plc’s oil assets located in Egypt, Canada, and the United States for about $7 billion. The following year, Apache signed a deal with Exxon Mobil Corp., purchasing assets in the North Sea.

By 2012, it acquired properties in Texas and Oklahoma when it took over Cordillera Energy Partners III LLC. Apache reportedly paid $3.13 billion as part of the bargain.

By mid-2013, Apache already had oil assets in Alaska, Kenya, and Nebraska, among others.

Apache’s CEO Steve Farris mentioned that major asset purchases will now take a back seat as it now plans to concentrate on oil exploration.

Farris explained that part of its strategy was to buy mature oil fields and invest in oil drilling technology to maximize their productivity. The company also has development leases and drilling concession in Egypt.  This is the region outside of N. America where the company gets most of its oil output.

Apache continues to operate in the country as usual and will continue to invest in its oil fields amid political tension.  Farris recently met with the country’s representatives, and it seems all is well between the two parties.