APA Corporation is selling non-core assets in Texas for over $700 million, with divestments in the Midland Basin and East Texas.
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APA Wells Drilled Since 2023
The proceeds will primarily reduce borrowings, and both transactions are expected to close early Q3 2024. APA is also acquiring Callon Petroleum for $4.5 billion to expand its Permian Basin operations. WildFire Energy, continuing its expansion, acquired 237,000 net acres in East Texas from APA, boosting its Eagle Ford presence.
Summary
- Divestments:
- Sold non-core properties in Texas for over $700 million in two transactions.
- Midland Basin: Nearly 24,000 net royalty acres sold, with net production of about 2,000 barrels of oil equivalent per day (boepd) in Q1 2024. Barclays acted as the financial advisor.
- East Texas: 237,000 net acres sold in the Austin Chalk and Eagle Ford plays, with net production of around 11,000 boepd in Q1 2024. TD Securities served as the financial advisor.
- Usage of Proceeds:
- Proceeds will be primarily used to reduce nearer-term borrowings.
- APA’s Strategy:
- CEO John Christmann IV emphasized that these transactions align with APA’s strategy to actively manage its portfolio by exiting non-competitive or non-core assets.
- Timeline:
- Both sales are expected to close early in Q3 2024.
- Acquisition:
- In January, APA agreed to acquire Callon Petroleum in an all-stock deal worth approximately $4.5 billion.
- Post-acquisition, APA’s combined acreage in the Midland and Delaware Basins will increase significantly, boosting production to over 500,000 boepd and enterprise value to over $21 billion.
WildFire Energy:
- Recent Acquisition:
- Acquired approximately 237,000 net acres and interests in 465 wells in the East Texas Eagle Ford play from Apache Corporation.
- Q1 2024 net daily production from these assets was about 11,000 boepd (67% liquids).
- Estimated unaudited net proved reserves were around 40 million barrels of oil equivalent (MMboe) as of December 31, 2023.
- Strategic Impact:
- The acquisition enhances WildFire’s operational scale in the Eagle Ford, now operating over 2,000 gross wells on over 850,000 net acres in the region.
- This acquisition follows previous strategic acquisitions in the Eagle Ford, including assets from Chesapeake Energy Corporation, MD America Energy, LLC, and Hawkwood Energy, LLC.
- Company Overview:
- WildFire Energy, led by Anthony Bahr (CEO), Steve Habachy (President/COO), and Drew Cozby (CFO), focuses on production-weighted oil and gas assets in onshore US basins.
- Formed in 2019 with backing from Warburg Pincus, Kayne Anderson, and management, WildFire aims to optimize and develop reserves using modern technologies and extensive operating experience.
These transactions underscore APA’s ongoing strategy to streamline its portfolio and focus on core assets, while WildFire Energy continues to consolidate and expand its presence in the Eagle Ford basin.
