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Jim N. won't appreciate the don-like thread title...but I thought this the most amusing story of the day [I am easily amused apparently]...
My colour commentary below the press release excerpt.Virtually everything that BP is selling, and Apache is buying, are legacy assets that BP acquired when it purchased Chicago-headquartered Amoco Corporation in 1998.
The thinking going on at 1 St James's Square, London [BP International Headquarters] hasn't changed much apparently.
When BP acquired Amoco it acquired the considerable heavy oil and oil sands assets of Amoco's Canadian subsidiary Amoco Canada. Within a very short period BP had closed down or divested of every one of these, and eliminated all of the people and technical expertise that Amoco Canada had spend decades developing. At the time BP, under Sir John Browne's leadership, would not consider unconventional resource such as the Canadian oil sands as legitimate...and this was reflected in the annual BP "Statistical Review of World Energy", one of the "bibles" of the industry, which for many, many years reflected only a miserably tiny portion of the resource in the Canadian oil sands.
Then in 2007 BP did a complete volte-face and announced an oil sands partnership with Chinese controlled Husky Energy in which the two companies planned to spend $5.5 Billion in the first half of this decade to exploit some of Husky's Canadian oil sands assets and integrate the output with capacity in BP's USA refinery system. BP had no way to rebuild what it dismantled, sold off and laid off in the aftermath of the Amoco acquisition...it had no choice but to buy its way back in.
Now BP is selling off upstream assets in some of the most secure jurisdictions in the world - the USA onshore, Canada and Egypt [the latter with which I have considerable direct experience during my time in the Middle East], while it keeps assets such as its Russian JV BP-TNK which has been a severely troubled and costly experience for many years now.
Nobody is likely to conclude that BP suffers from the burden of a sound business strategy. Today's divestments will also prove to be a mistake in the fullness of time. English hubris writ large...
My colour commentary below the press release excerpt.
Apache to Acquire BP Assets in Permian Basin, Canada and Egypt For $7 Billion
- Legacy assets complement existing operations in all three areas - Adds proved reserves of 385 million barrels of oil equivalent and approximately 83,000 boe per day of production - Substantial development opportunities and additional resource potential
HOUSTON, July 20, 2010 /PRNewswire via COMTEX News Network/ -- Apache Corporation (NYSE, Nasdaq: APA) today announced it has agreed to acquire all of BP's oil and gas operations, acreage and infrastructure in the Permian Basin of West Texas and New Mexico and Egypt's Western Desert. Apache also will acquire substantially all of BP's upstream natural gas business in western Alberta and British Columbia. Apache will pay $7 billion for the assets, which include estimated proved reserves of 385 million barrels of oil equivalent (boe).
Net production from the properties in the first half of 2010 was 28,000 barrels of liquid hydrocarbons and 331 million cubic feet of gas (MMcf) per day, or a total of approximately 83,000 boe per day. By comparison, in the just-completed second quarter of 2010 Apache produced 646,866 boe per day. The transaction also adds 2.4 million net acres to Apache's global portfolio.
"This is a rare opportunity to acquire legacy positions from a major oil company, with oil and gas production, acreage, infrastructure, seismic data, field studies, exploration prospects and other essential aspects of our business," said G. Steven Farris, Apache's chairman and chief executive officer. "We seldom have an opportunity like this in one of our core areas let alone three. This is a step change that will add muscle, enabling Apache to add value for decades to come through our demonstrated exploitation capabilities and exploration drilling."
The effective date of the transaction is July 1, 2010...
...Permian Basin acquisition
Apache is acquiring 10 field areas in the Permian Basin with estimated proved reserves of 141 million boe (65 percent liquids), first-half 2010 net production of 15,110 barrels of liquids and 81 MMcf of gas per day, and two operated gas processing plants.
"These are under-exploited assets with 1.7 million gross acres - including 405,000 net mineral and fee acres - in prospective areas of the basin with substantial opportunities for new drilling." Farris said.
Apache produced 42,287 barrels of liquids and 86 MMcf of gas per day (net) in the Permian Basin during the second quarter of 2010. At year-end 2009, Apache had proved reserves of 469 million boe and 961,000 gross acres in the Permian.
Canada acquisition
Apache is acquiring resource-rich acreage in western Canada with estimated proved reserves of 224 million boe (94 percent gas) and first-half 2010 net production of 6,529 barrels of liquids and 240 MMcf of gas per day.
"We are buying a substantial production base and 1.3 million net acres that include significant positions in several emerging unconventional plays including the Montney, Cadomin, Doig and coalbed methane," Farris said.
In the second quarter, Apache's Canadian operations produced 340 MMcf of gas and 16,557 barrels of liquids per day. At year-end 2009, Apache had 531 million boe of proved reserves and 5.6 million gross acres in Canada.
Egypt acquisition
Apache is acquiring four development leases and one exploration concession across 394,300 acres in Egypt's Western Desert. The assets have estimated proved reserves of 20 million boe (59 percent liquids), and first-half 2010 net production of 6,016 barrels of oil and 11 MMcf of gas per day.
"This is under-explored acreage in a highly prospective area of the Western Desert; a 3-D seismic acquisition program is under way," Farris said. "BP's holdings also include strategically positioned infrastructure including a natural gas processing plant, a liquefied petroleum gas plant and oil and gas export lines. These facilities will enable Apache to increase production from our existing fields in the Western Desert."
Apache's second-quarter net production in Egypt averaged 98,495 barrels of oil per day - up 8.5 percent from the first quarter - and 388 MMcf of gas per day, up 7 percent. At year-end 2009, Apache had estimated proved reserves of 309 million boe and 11.1 million gross acres in Egypt.
"This transaction provides a sustainable growth platform for Apache's onshore North America operations that complements our recent transaction with Devon Energy Corp. in the Gulf of Mexico and our pending merger with Mariner Energy, as well as strategic infrastructure and exploration potential in Egypt," Farris said...
- Legacy assets complement existing operations in all three areas - Adds proved reserves of 385 million barrels of oil equivalent and approximately 83,000 boe per day of production - Substantial development opportunities and additional resource potential
HOUSTON, July 20, 2010 /PRNewswire via COMTEX News Network/ -- Apache Corporation (NYSE, Nasdaq: APA) today announced it has agreed to acquire all of BP's oil and gas operations, acreage and infrastructure in the Permian Basin of West Texas and New Mexico and Egypt's Western Desert. Apache also will acquire substantially all of BP's upstream natural gas business in western Alberta and British Columbia. Apache will pay $7 billion for the assets, which include estimated proved reserves of 385 million barrels of oil equivalent (boe).
Net production from the properties in the first half of 2010 was 28,000 barrels of liquid hydrocarbons and 331 million cubic feet of gas (MMcf) per day, or a total of approximately 83,000 boe per day. By comparison, in the just-completed second quarter of 2010 Apache produced 646,866 boe per day. The transaction also adds 2.4 million net acres to Apache's global portfolio.
"This is a rare opportunity to acquire legacy positions from a major oil company, with oil and gas production, acreage, infrastructure, seismic data, field studies, exploration prospects and other essential aspects of our business," said G. Steven Farris, Apache's chairman and chief executive officer. "We seldom have an opportunity like this in one of our core areas let alone three. This is a step change that will add muscle, enabling Apache to add value for decades to come through our demonstrated exploitation capabilities and exploration drilling."
The effective date of the transaction is July 1, 2010...
...Permian Basin acquisition
Apache is acquiring 10 field areas in the Permian Basin with estimated proved reserves of 141 million boe (65 percent liquids), first-half 2010 net production of 15,110 barrels of liquids and 81 MMcf of gas per day, and two operated gas processing plants.
"These are under-exploited assets with 1.7 million gross acres - including 405,000 net mineral and fee acres - in prospective areas of the basin with substantial opportunities for new drilling." Farris said.
Apache produced 42,287 barrels of liquids and 86 MMcf of gas per day (net) in the Permian Basin during the second quarter of 2010. At year-end 2009, Apache had proved reserves of 469 million boe and 961,000 gross acres in the Permian.
Canada acquisition
Apache is acquiring resource-rich acreage in western Canada with estimated proved reserves of 224 million boe (94 percent gas) and first-half 2010 net production of 6,529 barrels of liquids and 240 MMcf of gas per day.
"We are buying a substantial production base and 1.3 million net acres that include significant positions in several emerging unconventional plays including the Montney, Cadomin, Doig and coalbed methane," Farris said.
In the second quarter, Apache's Canadian operations produced 340 MMcf of gas and 16,557 barrels of liquids per day. At year-end 2009, Apache had 531 million boe of proved reserves and 5.6 million gross acres in Canada.
Egypt acquisition
Apache is acquiring four development leases and one exploration concession across 394,300 acres in Egypt's Western Desert. The assets have estimated proved reserves of 20 million boe (59 percent liquids), and first-half 2010 net production of 6,016 barrels of oil and 11 MMcf of gas per day.
"This is under-explored acreage in a highly prospective area of the Western Desert; a 3-D seismic acquisition program is under way," Farris said. "BP's holdings also include strategically positioned infrastructure including a natural gas processing plant, a liquefied petroleum gas plant and oil and gas export lines. These facilities will enable Apache to increase production from our existing fields in the Western Desert."
Apache's second-quarter net production in Egypt averaged 98,495 barrels of oil per day - up 8.5 percent from the first quarter - and 388 MMcf of gas per day, up 7 percent. At year-end 2009, Apache had estimated proved reserves of 309 million boe and 11.1 million gross acres in Egypt.
"This transaction provides a sustainable growth platform for Apache's onshore North America operations that complements our recent transaction with Devon Energy Corp. in the Gulf of Mexico and our pending merger with Mariner Energy, as well as strategic infrastructure and exploration potential in Egypt," Farris said...
The thinking going on at 1 St James's Square, London [BP International Headquarters] hasn't changed much apparently.
When BP acquired Amoco it acquired the considerable heavy oil and oil sands assets of Amoco's Canadian subsidiary Amoco Canada. Within a very short period BP had closed down or divested of every one of these, and eliminated all of the people and technical expertise that Amoco Canada had spend decades developing. At the time BP, under Sir John Browne's leadership, would not consider unconventional resource such as the Canadian oil sands as legitimate...and this was reflected in the annual BP "Statistical Review of World Energy", one of the "bibles" of the industry, which for many, many years reflected only a miserably tiny portion of the resource in the Canadian oil sands.
Then in 2007 BP did a complete volte-face and announced an oil sands partnership with Chinese controlled Husky Energy in which the two companies planned to spend $5.5 Billion in the first half of this decade to exploit some of Husky's Canadian oil sands assets and integrate the output with capacity in BP's USA refinery system. BP had no way to rebuild what it dismantled, sold off and laid off in the aftermath of the Amoco acquisition...it had no choice but to buy its way back in.
Now BP is selling off upstream assets in some of the most secure jurisdictions in the world - the USA onshore, Canada and Egypt [the latter with which I have considerable direct experience during my time in the Middle East], while it keeps assets such as its Russian JV BP-TNK which has been a severely troubled and costly experience for many years now.
Nobody is likely to conclude that BP suffers from the burden of a sound business strategy. Today's divestments will also prove to be a mistake in the fullness of time. English hubris writ large...
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