HOUSTON (The Deal) -- Houston oil and gas explorer Apache (APA) said after the markets closed Wednesday that it agreed to sell all of its operations in Argentina to state-run YPF SA for $852 million, more than what some analysts were expecting but below what similar properties had sold for in the area.
The price includes $800 million in cash and the assumption of $52 million in bank debt as of June 30 of last year.
YPF paid a $50 million deposit on the transaction, which Apache expects to close in 30 days.
Apache said it had estimated reserves in Argentina of 540 billion cubic feet of natural gas equivalent at the end of last year and produced an average of 256 million cubic feet of gas equivalent per day over the year. It has stakes in 25 fields, including the massive Vaca Muerta shale field.
YPF said separately that the acquisition will boost its reserves by 14% and its natural gas production by 15%.
Analysts at Tudor, Pickering, Holt & Co. Securities Inc. wrote in a report Thursday that the sale represents $3,400 per thousand cubic feet equivalent on 254 million cubic feet equivalent per day of production as of the third quarter, or 4.5 times cash flow.
While the analysts found the deal to be neutral to Apache's net asset value and multiples, they said it's likely to be viewed positively, as cash has been trapped in the country. And while net proceeds could be subject to repatriation tax if brought back to U.S., they said that can be avoided if the capital is deployed internationally.