Whenever two companies in Texas decide to merge or one company decides to buy another, it is never easy. Federal regulators will be watching every step of the way, and a wrong move could lead to visits from the Department of Justice or the Securities and Exchange Commission.
In what would definitely be one of the largest acquisitions so far in 2012, Houston-based Apache Corp. will buy Cordillera Energy Partners III LLC for $2.85 billion in cash and stock.
Apache, a multinational oil and gas company, wants access to Cordillera's vast holdings in the Anadarko Basin, an area of land in Oklahoma and the Texas Panhandle that has one of the United States' largest reserves of natural gas and oil.
One analyst said the price of gas would have to go up for Apache to make money off the acquisition, because the purchase price amounts to approximately $6,000 an acre. Natural gas prices have dropped as the extraction method of hydraulic fracturing, also known as "fracking," has exploded across the country.
Some of the fields also produce crude oil and other materials, and Apache said in a statement that the acquisition would equal roughly 71.5 million barrels of oil. With the price of oil hovering around $100 a barrel, oil production will be profitable in the deal. Apache's stock price went up 1.6 percent after news of the announcement. The company plans to borrow to help finance the purchase.
With oil and gas exploration ramping up in the United States as the economy continues to grow, many energy companies will probably look to acquire assets from other companies. Expert legal consultation is essential in situations like these.
Source: Business Week, "Apache to Buy Cordillera Energy Partners for $2.85 Billion," James Paton and Edward Klump, Jan. 24, 2012