Apache (NYSE: APA) has announced that it intends to acquire North Sea assets from ExxonMobil (NYSE: XOM) for $1.75 billion. This is a major investment by Apache, which touted the assets as "the best North Sea assets we've evaluated since acquiring the Forties Field in 2003." The deal will provide Apache with operational rights in the Beryl, Nevis, Ness, Nevis South, Skene, and Buckland fields.

Let's dig deeper
Apache is known for its ability to wring additional value from older fields and it has some good extraction experience in the North Sea area. For example, after Apache acquired Forties Field, the production of the field increased by almost 75% in eight years. At 161 million barrels of oil equivalent -- or MMBOE -- production has been more than the proved reserves and an additional estimate of 171 MMBOE in new reserves.

The North Sea assets being acquired from Exxon have per-day production of 19,000 barrels of oil and natural gas liquids, as well as 58 million cubic feet of natural gas, with 68 million barrels of oil equivalent of proven reserves. The deal will also provide Apache operational interest in the Beryl/Brae gas pipeline and the SAGE gas plant along with Benbecula exploration acreage.

The acquisition should enable Apache to take advantage of higher oil prices in the European market, where oil is trading at a premium of about $24 per barrel. Almost half of the production is sold in the European market, providing Apache a good opportunity to cash in on the premium. The acquisition increases Apache's access to oil reserves in the North Sea and positions it well against competitors like BP (NYSE: BP) and ConocoPhillips (NYSE: COP).

Now what?
The deal is planned to close by year's end and is expected to increase Apache's North Sea proved reserves by 44% and production by 54%. It should guarantee Apache quality reservoirs, high production capacity, and additional field life.

The deal also strengthens Apache's presence in the natural gas market, which is showing rapid growth thanks to demand from developing economies like India and China and a waning interest in nuclear power after the Fukushima Daiichi nuclear plant situation. Apache has already ventured into natural gas joint ventures with oil companies including Chevron (NYSE: CVX) and Royal Dutch Shell (NYSE: RDS-A).

The acquisition is to be paid fully in cash. With strong operating cash flows, Apache shouldn't have a hard time coming up with the money.

Foolish takeaway
Apache is definitely determined to gear up for top-line growth through acquisitions and joint ventures in different oil and gas ventures. Provided the deal with ExxonMobil gets regulatory approval, it should help it do just that. Apache is a stock worth watching.