Apache to Sell Assets to YPF?


According to a recent Reuters report, U.S. energy firm Apache Corp. (APA) is discussing the sale of its assets in Argentina with state-owned YPF S.A. (YPF). However, neither of the companies have confirmed the news.

Apache has around 25 oil fields in the South American country. Last year, the Argentinean assets contributed around 6% to the company’s production and comprised around 3% of the proved reserves at the end of the year. However, third quarter 2013 production in Argentina remained flat year over year.

The company has presence in Argentina since 2001 and holds operations in the regions of Neuquén, Rio Negro, Tierra del Fuego, and Mendoza. The company has around 1.2 million net acres in the giant Vaca Muerta shale, which contains around 661 billion barrels of oil and 1,181 trillion cubic feet of natural gas.

According to Reuters, the company has invested over $16 billion in oil and gas assets in the past three years. However, the Houston, Texas-based company now plans to sell off these assets after trying in vain to increase their production level.

In May, the company announced plans to divest assets worth $4 billion to strengthen its balance sheet and lower the debt level. In accordance with the divestment plan, Apache announced the sale of its Canada-based oil and gas properties for a total consideration of $112 million in September and closed the sale of its Gulf of Mexico (GoM) shelf assets for a cash consideration of roughly $3.75 billion in October.

Apache is one of the world's leading independent energy companies engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids.

Apache currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, investors interested in the energy sector may consider stocks like Matador Resources Company (MTDR) and Abraxas Petroleum Corp. (AXAS). Both these stocks carry a Zacks Rank #1 (Strong Buy).

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