Apache Captures Mariner in $2.7B Deal
Apache and Mariner Energy have entered into a merger agreement that will combine Apache's global reach and resources with Mariner's track record of successful deepwater exploration and its resource potential.
"This is a strategic step and a natural extension into the deepwater Gulf for Apache," said G. Steven Farris, Apache's chairman and chief executive officer. "Mariner provides an exciting new platform for growth in the deepwater and complements our strengths in the Gulf Shelf and the Permian Basin. Based on our experience working with the Mariner team, we also believe the two companies will make an excellent cultural fit."
"The combination with Apache is an excellent outcome for Mariner's stakeholders. Our shareholders will be rewarded for their faith and support in our company with the opportunity to further benefit from the upside provided from the merger. Our partners will work with a world-class company with the financial and technical resources to fully exploit our assets. Our employees will benefit from the opportunities provided in a large company with values similar to Mariner's," said Scott D. Josey, Mariner's chairman, chief executive officer and president.
Under the agreement, Mariner shareholders will receive, in aggregate, 0.17043 of a share of Apache common stock and $7.80 in cash for each outstanding share of Mariner's common stock, subject to an election feature and proration. At Apache's closing stock price of $108.06 on April 14, 2010, the transaction values Mariner's shares at $26.22 per share or approximately $2.7 billion. Apache also will assume $1.2 billion in debt.
In February, Mariner produced 63,000 barrels of oil equivalent (boe) per day from the Gulf Shelf and deepwater, the Permian Basin and unconventional onshore plays. At year-end 2009, Mariner had estimated proved reserves of 181 million boe (47 percent liquid hydrocarbons) as well as unbooked resource potential of 2 billion boe.
Mariner's deepwater portfolio includes nearly 100 blocks, seven discoveries in development -- including interests in Lucius and Heidelberg -- and more than 50 prospects.
"We have considered extending our Gulf of Mexico operations into the deepwater for a number of years," Farris said. "This is the right set of assets and the right time for Apache to expand its deepwater presence.
"Mariner brings an inventory of developments and prospects that will jump-start our position in the deepwater Gulf; Apache's financial resources will maximize the value of the portfolio," he said. "It's the right time because recent advances in seismic technology and continued enhancements in facilities design have reduced the risks in one of the world's most prolific oil exploration basins."
Apache and Mariner teamed up in the 2008 deepwater Geauxpher discovery and development at Garden Banks 462. "Mariner's skilled, experienced professionals share our values and sense of urgency," Farris said.
In addition to Geauxpher, Apache has drilled several deepwater discoveries in Egypt and Western Australia.
Mariner also has more than 240 blocks on the Gulf Shelf and more than 200,000 net acres across several emerging onshore plays. "Mariner's Gulf Shelf and Permian assets are both excellent fits with our existing core areas," Farris said. "These fields provide strong cash flow, drilling inventory and upside potential."
Earlier this week, Apache announced it will acquire additional Gulf Shelf assets from Devon Energy Corporation that add production of 19,000 boe per day with year-end 2009 estimated proved and probable reserves of 83 million boe across 158 blocks.
Apache's last corporate transaction, with the Phoenix Resource Companies in 1996, established Apache as an operator in Egypt and set the stage for the region to become one of the company's principal growth areas.
"Combining with Mariner enhances Apache's global portfolio, which is balanced in terms of commodity mix, geography and geology," Farris said. "This transaction is similar to our earlier strategic steps, bringing near-term production and cash flow as well as long-term upside potential from a large acreage position with identified exploration opportunities."
The transaction is subject to approval by Mariner's shareholders and customary regulatory approvals. Completion of the transaction is expected in the third quarter of 2010.
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Company: Mariner Energy more info
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