APA has agreed to divest its non-core producing assets in the Permian Basin, US to an undisclosed party for a price of $950m.
These assets are located in the Central Basin Platform, Texas and New Mexico Shelf, and Northwest Shelf. They currently produce an estimated net total of 21,000 barrels of oil equivalent per day (boe/d), with approximately 57% of this being oil.
APA said that the proceeds from the sale are designated for debt reduction. The transaction will be effective from 1 July 2024, with the anticipated closure in Q4 2024.
RBC Richardson Barr is serving as the lead financial adviser for APA, with Truist Securities also acting as financial adviser. Bracewell is providing legal advice on the transaction.
APA’s operations include subsidiaries engaged in oil and natural gas exploration and production in the US, Egypt, and the UK, as well as offshore Suriname and other locations.
The company’s pro forma production guidance for Q4 2024 in the US is 307,000boe/d, representing a 34% increase from its Q4 2023 production figures.
The company’s most recent financial results, which were for Q2 2024, show a net income attributable to common stock of $541m, or $1.46 per diluted share.
During this period, reported production was 473,000boe/d, while adjusted production, excluding Egypt noncontrolling interest and tax barrels, stood at 405,000boe/d.
US oil production for the second quarter reached 139,500 barrels per day, marking a 67% increase from Q1 2024, largely due to the addition of Callon Petroleum.
In the second quarter, APA finalised non-core asset sales, generating approximately $660m in net proceeds from assets producing about 13,000boe/d in Q1 2024. For the remainder of 2024, the company plans to operate an average of nine to ten rigs in the Permian Basin and 11 rigs in Egypt.
In April 2024, APA completed the $4.5bn acquisition of Callon Petroleum, an oil and natural gas company with operations in the Permian Basin. The assets acquired from Callon Petroleum are expected to expand APA’s operational presence in the Permian Basin, particularly in the Delaware Basin, where the latter held nearly 120,000 acres.
APA CEO John Christmann IV said: “Through multiple transactions completed this year, we have high graded and focused our US asset base. Our remaining Permian position has scale and balance in the unconventional Midland and Delaware Basins.
“The net impact of our acquisition of Callon Petroleum and the follow-on asset sales is that APA has increased its onshore US production by approximately 66,000boe/d in 2024 and continued to add economic unconventional inventory, with no material change in net debt levels compared to year-end 2023.”
