Oil and gas producer Apache Corp. will pay $2.85 billion to pick up privately-held Cordillera Energy Partners III LLC.
The deal gives Houston-based Apache access to land with potential oil and gas fields in Oklahoma and Texas. Apache also gets oil wells already producing in the region.
The land will allow Apache opportunities to drill new wells in underground shale rock estimated to contain 71.5 million barrels of oil equivalent per day. Existing wells already produce 18,000 barrels of oil equivalent per day.
The move underscores Apache’s shift in focus to land-based drilling in North America.
The deal gives Apache 254,000 acres atop a deeply buried layer of rock in the Granite Wash, which straddles the Texas-Oklahoma border. Apache has been drilling in the area for 35 years, but new methods of recovering oil and natural gas, including horizontal drilling and fracking, have transformed its potential.
Its horizontal wells drilled in the last three years now make up half of Apache’s Central Region production. Cordillera’s owners, including EnCap Investments, other institutional investors and Cordillera management, will receive about $600 million in Apache stock. The rest of the acquisition will pay out in cash.
The deal should close in the second quarter. Apache said adding in the new firm should add to its earnings and cash flow starting this year.
Apache has operations in the U.S., Canada, Egypt, the North Sea, Australia and Argentina.