Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.

Recs

0

Would Apache Be Able to Bail Egypt Out?

Egypt and its recent troubles have been a Sword of Damocles hanging over Apache (NYSE: APA  ) since the Arab Spring erupted in December 2010. Since then, Egypt has been in a constant state of flux that has led to new leadership and economic struggles. Apache is currently one of the largest leaseholders and producers in the country, and investors' worries regarding the country-specific risks have left the stock trading well below its peer averages.

Recent struggles providing its citizens with affordable diesel fuel have left the country clamoring for deals with its Middle East brethren. Some countries have come to its aid, but with only 50% of its refining capacity being used, wouldn't it make sense to put its own reserves to work?

What kind of presence does Apache have?
Egypt currently accounts for 10% of Apache's total estimated reserves, at 273 million barrels of oil equivalent. That level of reserves resides under 9.7 million gross acres, making Apache the largest leaseholder in Egypt's Western Desert. For 2013, management plans to invest $1.1 billion in the region to continue its successful campaign there, and closer ties with the government would make things that much more comfortable. 

Historically, Egypt has provided subsidies for fuel, but the International Monetary Fund is requesting that these come to an end before it lends $4.8 billion in vital funds to President Mohamed Morsi and his constituents. While this may seem like a no-brainer for Morsi, cutting an expected $17 billion in 2013 subsidies isn't something the Egyptian people would take lightly. 

Food for Foolish thought
Rather than rely on governments in surrounding nations to transport crude oil into the country, why not work directly with Apache to formulate a deal that would not only help solve the fuel dilemma but also be likely to add jobs in the refining sector? True, the country's currency is ailing, but if it decided to keep its own production within its borders, this would be a non-starter. Then, once the IMF funds had time to permeate the country, perhaps the currency would pick up, and it would become economically viable to export domestically produced fossil fuels and the accompanying derivative products.

If you're on the lookout for some other currently intriguing energy plays, check out The Motley Fool's "3 Stocks for $100 Oil." For free access to this special report, simply click here now.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2408853, ~/Articles/ArticleHandler.aspx, 8/29/2015 3:35:07 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Taylor Muckerman
TMFrunAMuck

Taylor is an Associate GM in our Fool International operations. Prior to that he covered all things Energy + Materials as an analyst. Over the years, he has built an investing skill set to rely on when evaluating companies inside and out. While at the Fool, he has made appearances on CNBC and Fox Business. In addition, he completed his MBA at the University of Maryland and will sit for the Level II CFA Exam.

Today's Market

updated 6 hours ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 4:02 PM
APA $44.86 Up +2.07 +4.84%
Apache Corp CAPS Rating: ****