Three years ago, The Wall Street Journal ran an article entitled "Apache Sees Profit in Discards." There, Apache's
Not a lot has changed in the ensuing years, save for decisive shifts by Devon Energy
We've been watching Devon shed its offshore and international assets for a while now. BP took $7 billion worth of assets -- including all of Devon's remaining deepwater Gulf of Mexico interests -- off the company's hands just last month. Left behind was a package of shallow- water U.S. properties that couldn't be much more unfashionable. Apache is happily snapping that up for the sum of $1.05 billion.
So, is this a good deal for the detritus developer? Apache is paying a little more than $25 per barrel of proved reserves and around $55,000 per flowing barrel. The latter figure is quite cheap for an asset that's roughly half oil and liquids by both reserves and production volume, as seen by comparison with other recent deals. Apache's acquisition immediately adds to cash flow, whereas SandRidge Energy's
It's great to see Apache zig whiles the rest of its peers zag. This has been a winning formula in the past, and I see no reason for it to stop working now.