HOUSTON - APA Corporation (NASDAQ:APA), a prominent oil and natural gas exploration and production company, has entered into a definitive agreement to sell certain non-core producing properties in the Permian Basin for $950 million. The undisclosed buyer will acquire assets located in the Central Basin Platform, Texas and New Mexico Shelf, and Northwest Shelf, which currently yield an estimated net production of 21,000 barrels of oil equivalent per day (boe/d), with approximately 57% being oil.
The proceeds from the sale, which is subject to customary closing adjustments, are primarily intended for debt reduction. The effective date of the transaction is set for July 1, 2024, with an expected closure in the fourth quarter of 2024.
APA Corporation's CEO, John J. Christmann IV, stated that this sale is part of the company's strategy to high-grade and concentrate its U.S. asset base. Following this and other transactions in 2024, APA's onshore U.S. production has increased by approximately 66,000 boe/d, while maintaining a consistent level of net debt compared to the end of 2023.
The company's post-transaction production guidance for the fourth quarter of 2024 stands at 307,000 boe/d, marking a 34% increase over the same period in 2023. Christmann emphasized APA's competitive position, with a more focused unconventional asset base in the Permian Basin and a diversified global portfolio offering both geographic and price diversification, as well as exploration potential.
RBC Richardson Barr acted as the lead financial advisor, with Truist Securities also providing financial advisory services. Legal counsel was provided by Bracewell LLP.
APA Corporation continues to explore and produce oil and natural gas across the United States, Egypt, and the United Kingdom, with additional exploration activities offshore Suriname and in other regions.
This news article is based on a press release statement from APA Corporation.
In other recent news, major U.S. natural gas producers, including EQT Corporation (NYSE:EQT) and Apache Corporation (NASDAQ:APA), are planning to reduce their output in response to a near 40% price drop over the last two months. Apache Corporation has also been the subject of various analyst adjustments. Truist Securities revised its price target for Apache Corp ., decreasing it to $45 from the previous $52 while maintaining a Buy rating. In contrast, Scotiabank reaffirmed its Sector Perform rating on Apache Corp with a steady price target of $30.00. TD Cowen also maintained its Hold rating on Apache Corp. with a steady price target of $36.00. These recent developments reflect changes in market conditions and updated forecasts for the years 2024 through 2026.
Apache Corp. has been strategically curtailing the production of gas and gas liquids in response to unfavorable pricing, while also repurchasing 1.5 million shares within the quarter as part of its ongoing efforts to manage its share count and return value to shareholders. Furthermore, APA Corporation recently sold its non-core assets in two transactions, generating over $700 million, which will primarily be used to lower near-term borrowings.
These recent developments reflect the strategic decisions and analyst revisions that are shaping the performance and future expectations for Apache Corp. and other major U.S. natural gas producers.
InvestingPro Insights
As APA Corporation (NASDAQ:APA) streamlines its asset portfolio through the sale of non-core properties in the Permian Basin, the company's financial metrics and market performance provide additional context for investors. According to InvestingPro data, APA Corporation's market capitalization stands at $8.82 billion, reflecting the company's substantial presence within the energy sector. With a notably low P/E ratio of 2.61 and an adjusted P/E ratio of 2.84 for the last twelve months as of Q2 2024, the company appears to offer an attractive valuation relative to its earnings.
InvestingPro Tips highlight that APA Corporation has a strong dividend track record, having maintained dividend payments for 54 consecutive years, which may be appealing for income-focused investors. Additionally, the company is trading near its 52-week low, suggesting potential value for those looking to capitalize on recent price movements. It's important to note that analysts predict APA will be profitable this year, a sentiment that is supported by the fact that the company has been profitable over the last twelve months.
For investors considering APA Corporation's stock, it's worth mentioning that the company's price is currently at 53.75% of its 52-week high, and it closed recently at $24.92. Moreover, the InvestingPro platform lists several additional tips, providing further insights into the company's performance and potential investment opportunities.
Investors interested in a deeper analysis of APA Corporation's financial health and stock performance can find more InvestingPro Tips on https://www.investing.com/pro/APA, which includes a comprehensive set of metrics and expert insights.
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