Apache Corp. (APA) was gaining Thursday after the Houston-based oil and gas explorer said it agreed to sell properties in Louisiana, Texas and Oklahoma to unnamed buyers for $1.4 billion. Shares were rising 1.6% to $73.19 to cut its 2014 decline to 15%.
Apache has been selling non-core assets to focus on its most promising shale plays - and keep corporate raiders at bay. In July, the Wall Street Journal reported that Jana Partners LLC had built a $1 billion stake in the company and was calling for it to sell off its international properties to focus on its U.S. holdings.
The exploration company has often been considered a likely takeover target. In June, trader website RANsquawk reported that ExxonMobil Corp. (XOM) was looking to make a bid for the company at $115 to $120 per share. Apache denied it.
Apache is selling its working interest in 90,000 net acres in southern Louisiana that produced 21,000 barrels of oil equivalent per day in the third quarter, 62% of which was natural gas and natural gas liquids. The company characterized the fields as mature, with high decline rates and short reserve lives. Apache is keeping its 275,000 mineral acres in south Louisiana.
Apache is also selling 115,000 net acres in part of its Stiles Ranch field in Wheeler County, Texas, and in its Mocane-Laverne and Verden fields in western Oklahoma. Those properties produced an average of 26,000 barrels of oil equivalent per day in the third quarter, 83% of which was natural gas and natural gas liquids.
Both transactions are expected to close this quarter.
Imperial Capital analyst Bob Christensen initiated coverage on Apache on Thursday with an outperform rating and a $92 price target, saying the company's high level of drilling in the liquids-rich Permian, the midcontinent and East Texas shale regions is yielding "strong and predictable high-margin production growth" that is likely to continue for years to come.
He said that Apache's divestiture program of "less predictable producing assets" over the past two years has helped, yielding far better proceeds and values than he initially thought, noting an expected sale of its international holdings as well.
Apache's stock was up 1.6%, to $73.20, in midmorning trading.
Apache chairman, CEO and president G. Steven Farris said in a statement Thursday that the company has made great progress in strategically positioning its North American onshore portfolio for high growth and high returns.
"We continue to focus on growing liquids production from our deep inventory of North American resource locations," he said.
Farris said the proceeds from the asset sales will be used primarily to fund its leasehold acquisition program this year, which has added a lot of acreage within its primary focus areas.
"We are excited about our 2015 drilling plan, which will focus on projects that generate high rates of return and competitive growth, even in today's lower oil price environment," he said.
Apache made the announcement as part of its analyst day held in New York on Thursday.
Apache said it forecasts North American onshore liquids growth this year of 12% to 16% when adjusted for asset sales and onshore production growth of 8% to 12% based on a barrel of oil equivalent basis, assuming a preliminary North American onshore exploration and production capital budget of $4 billion.
Apache also said it has added more than 300,000 acres of leasehold in key growth plays and boosted its drilling inventory in the Eagle Ford to 3,000 locations and in the Canyon Lime play to 800 locations. RBC Richardson Barr's Kevin Juno and Ben Bates advised Apache on the southern Louisiana transaction and Wells Fargo Securities LLC advised it on the Anadarko Basin deal.