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U.S. energy firm Apache Corp. has decided to stop exploring the offshore oil block in Kenya for hydrocarbons. The company will leave the East African country and is expected to look for other commercially viable projects with better prospects.

Last year, Apache gave up 50% of its ownership in L8 Block, located off the coast of Kenya. Tullow Oil plc of Britain and Pancontinental of Australia partnered Apache in the block. In the same time period, Apache also stopped operating the Mbawa-1 well of the block as it was unable to get commercially viable output of natural gas.

In order to focus on core operations, Apache has been divesting non-core assets. Moreover, the company’s year-to-date divestment proceeds now stand at around $7.0 billion. Apache is planning to use the realizations to increase its financial flexibility, trim down debt, to buy back shares and generate funds for investment in projects with high growth potential.

Houston, Texas-based Apache is one of the world's leading independent energy companies engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids.

We like Apache’s large geographically-diversified reserve base, as well as its balanced exposure to natural gas and crude oil, and multiyear trends in reserve replacement and production growth. This allows management to allocate capital and resources to high-return projects.

However, as is the case with other independent exploration and production companies, Apache’s results are directly exposed to oil and gas prices, which are inherently volatile and subject to complex market forces.

Apache currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at better performing oil and gas exploration and production firms like Swift Energy Co. , Matador Resources Company and Stone Energy Corp. that offer value. All the stocks sport a Zacks Rank #1 (Strong Buy).

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