"That's not a stretch at all," Oppenheimer analyst Fadel Gheit said during an interview with Platts. "The assets they bought were handpicked. BP said, 'We're going to let you pick what you want.' It's a terrific deal," Gheit said.
"How many times are you going to have a Macondo?" he asked rhetorically, noting that, in spite of Apache's spending, he remains surprised investors have not rallied to the company's shares.
Apache's shares closed Wednesday at $92.46 on the New York Stock Exchange, compared with a 52-week low of $81.94 and a high of $111.
Other analysts remain perplexed at investor reaction as well, stressing both their appreciation of the properties Apache received from BP and their respect for Apache's long track record of building a portfolio by collecting castaway assets from the majors.
Apache did not hesitate to pull the trigger July 20 on its largest acquisition in a legacy of big deals, offering $7 billion for complementary BP assets in the Permian Basin, Egypt and Canada that hit the market unexpectedly as BP struggled for cash to cover its tab on Macondo.
As a result, Apache is riding Macondo past rivals Devon Energy and Anadarko Petroleum to rank as the US' largest independent with proved oil-equivalent reserves of 2.37 billion barrels and rising daily production of more than 748,000 boe/d.
Those levels would even place Apache above Occidental Petroleum's 645,000 boe/d in 2009 production while gaining on Oxy's 3.23 billion boe of proved reserves.
Apache's decisive actions should come as no surprise to anyone who has followed the company closely, particularly since the start of this year when Apache executives said they had amassed a $4.3 billion war chest in anticipating a new window for deals after the commodity price collapse of
2009.
The April 20 blowout at BP's Macondo exploration well in 4,993 feet of water about 40 miles from Venice, Louisiana, destroyed Transocean's Deepwater Horizon drilling rig, killed 11 workers and created the largest marine oil spill in history.
That crisis rendered BP ripe for the ambitions of Apache, described in a February report by Gheit as a company that "has built its balanced asset portfolio through a combination of successful drilling and timely acquisitions in negotiated transactions that have created long-term value for its shareholders."
BIG PURCHASES EVEN BEFORE MACONDO
The BP deal is just the largest in $12 billion worth of acquisition spending by Apache this year.
Apache's spree began with two back-to-back April blockbusters: an April 12 deal with Devon to buy $1.05 billion worth of shallow-water Gulf shelf properties and a $3.9 billion bid three days later to acquire rival independent Mariner Energy as an entre into the Gulf's deepwater.
Just when Apache appeared to have exhausted its acquisitions war chest, however, Macondo blew five days later, forcing the company to consider an offer from BP it could not refuse despite the cost.
While Apache's trio of $12 billion in big deals increases its reserves by 26% and production by 28%, the $7 billion BP component is the largest, alone adding 16% reserves growth with 385 million boe and 14% in production with 83,000 boe/d.
In addition, Apache believes the assets include many targets for further exploration.
Apache spokesman Bill Mintz said his company's appetite for acquisitions should be satiated for the present as it works to complete all the deals and integrate the operations.
As far as Apache's new ranking among the independents, Mintz dismissed it as a goal, saying: "Our goal is to grow for the benefit of our shareholders."
"The acquisitions play to Apache's core competence of adding value to underworked assets in three of its core areas," wrote Buckingham Research Group analyst Robert Christensen in a report describing the BP deal as "right in Apache's wheelhouse."
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