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Apache Paying Up For Onshore Liquids

posted Jan 22, 2012, 9:47 PM by Jeff Davies   [ updated Jan 23, 2012, 4:14 AM ]
Come gather 'round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You'll be drenched to the bone.
If your time to you
Is worth savin'
Then you better start swimmin'
Or you'll sink like a stone
For the times they are a-changin'.
-Bob Dylan

The onshore liquids phenomenon has legs.  If you weren't sure by now, this deal shows it.  Apache is paying $2.85 billion to acquire Cordillera Energy Partners III.  The acquisition includes 254k net acres in the Anadarko Basin of TX and OK, net production of 18k/d, proved reserves of 71.5mm BOE and 14k potential future drilling locations.  Targets include Granite Wash, Tonkawa, Cleveland and Marmaton plays.

Acquisitions metrics are as follows:

$158,333 per flowing BOE
$39.86/proved BOE
$11,220 per acre

None of those metrics look particularly cheap to me which is surprising given APA is known as a company that picks up assets on the cheap.  Perhaps yet another sign management teams in the industry in general understand gas is in the crapper for awhile.  Liquids/oil assets will trade at a premium, in my opinion through this gassy downturn.  APA isn't under the gun, but many other companies have to re-invent themselves to survive.

Beneficiaries of the deal include CHK, UNT, NFX, FST, RRC, DVN, LINE, XEC, PVA, among others.