APA Corp, a major player in the U.S. oil and gas industry, is reportedly exploring the sale of its drilling properties in the Permian Basin, which spans Texas and New Mexico. The deal, potentially valued at around $1 billion, is part of APA’s broader strategy to focus on its shale operations and reduce its significant debt load, sources familiar with the matter told Reuters.
Strategic Asset Sale to Manage Debt
The Houston-based company, which owns the assets through its Apache subsidiary, is working with investment banks RBC Richardson Barr and Truist Securities to manage the sale process. These properties are located in key sub-sections of the Permian Basin, including the Northwest Shelf, Northern Shelf, and Central Basin Platform. Combined, these sites produce more than 22,000 barrels of oil equivalent per day, with oil making up approximately 60% of the output.
APA’s decision to divest these assets aligns with its ongoing efforts to streamline operations and reduce its $6.7 billion debt. The company aims to use proceeds from the sale to pay down the $2 billion of debt it acquired through its purchase of Callon Petroleum earlier this year. APA has set a goal to significantly reduce this debt over the next three years.
Industry Context and APA’s Portfolio Management
The potential sale comes at a time when the U.S. oil and gas industry is experiencing a wave of consolidation. Large energy producers are actively acquiring new assets to expand their scale and secure prime drilling locations. In line with this trend, APA has been actively managing its portfolio, focusing on core assets while divesting non-core properties.
Earlier this year, APA sold several non-core assets in the Permian and Eagle Ford basins, generating nearly $700 million. These moves are part of the company’s strategy to concentrate on high-value operations that align with its long-term goals.
Patrick Cassidy, Apache’s director of corporate communications, emphasized the company’s ongoing commitment to portfolio management. “You’ve seen us do multiple deals recently, including the Callon acquisition this year, and targeted divestments of non-core properties,” Cassidy said, while declining to comment on specific transactions.
The Bigger Picture in the U.S. Oil Industry
The sale of APA’s Permian assets, if finalized, would be another significant transaction in a rapidly consolidating industry. With energy companies eager to strengthen their positions in key basins like the Permian, which is one of the most prolific oil-producing regions in the world, deals of this nature are becoming increasingly common.
As APA continues to adjust its operations and focus on core assets, the company remains a key player in the industry’s ongoing evolution. By shedding non-core assets and reducing debt, APA is positioning itself to navigate the challenges and opportunities in the U.S. oil and gas market.
The outcome of this potential sale will be closely watched by industry analysts and investors, as it could signal further consolidation and strategic shifts among major energy companies operating in the Permian Basin.
Source: Reuters
