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U.S. energy firm Apache Corporation (APA - Analyst Report) recently announced that it will be offering $2.0 billion of notes. The offering is divided into two parts – $1.2 billion 2.625% notes due 2023 and $800 million 4.25% senior notes due 2044.

The public offering will fetch approximately $1.97 billion after deducting underwriting discounts and offering expenses. The net proceeds from this offering will be utilized for the repayment of outstanding commercial paper borrowings and other corporate purposes.

Apache expects the proceedings to be complete on December 3, 2012, subject to the fulfillment of customary closing conditions.

Apache Corporation ended the third quarter of 2012 with long-term borrowings of $10,670 million. The debt-to-capital ratio was 25.8% at quarter end. With the issuance of $2.0 billion of debt, the debt-to-capital ratio will increase to 29.2%.

Founded in 1954, 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.

Apache is noted for growing through acquisitions and the development of existing reserves. Its long-term production growth visibility improved significantly  following the recent BP Plc (BP - Analyst Report) asset acquisition; the purchase of a portion of Devon Energy Corporation’s (DVN - Analyst Report) Gulf of Mexico assets and the deal to acquire Mariner Energy. These new acreage positions further complement the company’s diversified asset base.

However, the company’s long-term production and reserve growth primarily depend on its acquire-and-exploit model. Apache may find it difficult to complete accretive transactions in the future, which could negatively impact its growth rate.

Apache holds a Zacks #3 Rank, equivalent to a Hold rating for a period of one to three months. Longer term, we maintain our Neutral recommendation on the stock.


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