Apache Snaps Up Mariner Energy

U.S. energy firm Apache Corp. (APA - Analyst Report) has agreed to acquire Texas-based oil and natural gas explorer Mariner Energy Inc. (ME) for about $4 billion in stock, cash and debt. The transaction, which is subject to regulatory and Mariner shareholder approvals, is expected to close in the third quarter of 2010.

As per the deal, Mariner shareholders would get $7.80 in cash and 0.17043 of a share of Apache common stock for each share they hold, representing a total value of $2.7 billion. At Apache's Wednesday’s closing stock price of $108.06, the deal values Mariner's shares at $26.22 each, a 45% premium to its last closing price. Additionally, Apache will assume $1.2 billion in debt.

Houston-based Mariner Energy is an independent energy explorer having principal operations in the Permian Basin, the Gulf Coast and the Gulf of Mexico. It specializes in deepwater exploration, with interests in nearly 100 blocks, seven discoveries in development and more than 50 prospects. 

The acquisition will allow Apache to extend its deepwater projects in the Gulf of Mexico. By combining its global presence and strong financial resources with Mariner's track record of successful deepwater exploration and an inventory of developments and prospects, Apache would be able to jump-start its position in one of the world's most prolific oil exploration basins. Apache is already involved in the 2008 deepwater Geauxpher discovery and development at Garden Banks 462 with Mariner.

This is Apache’s second major acquisition in the Gulf of Mexico this week, following the $1.05 billion deal to buy Devon Energy Corp's (DVN - Analyst Report) shallow-water oil and gas assets. The company has spent about $10 billion in the past decade on acquisitions and has been scouting for oil and gas properties that strategically fit into its existing exploration program.

Following the Mariner acquisition announcement, shares of Apache were down approximately 4%, while shares of Mariner jumped 40% in pre-market trading on Thursday.

Houston, Texas-based Apache Corp. 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. A majority of the company’s proved reserves and production comes from North America, where its operations are focused in the Gulf of Mexico, the Gulf Coast, East Texas, the Permian basin, the Anadarko basin and the Western Sedimentary basin of Canada. Internationally, Apache has core operations in onshore Egypt, offshore U.K. North Sea, onshore Argentina and offshore Western Australia.

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