Currently, oil exploration and production companies are looking to restructure their assets. This restructuring is happening through sales of existing assets to improve cash positions. The companies are allocating the cash to assets in the U.S. that are more productive, enhancing their growth. The advancement of economical technology to extract shale gas is attracting these companies to the U.S. mainland. How will these growth strategies translate into revenue for three major oil exploration and production companies?
Sailing out of Gulf of Mexico and anchoring in the U.S.
The abandonment process will cost the company $424 million this year. Abandonment is the process of plugging of wells after their productive life. The proceeds from this divestment will help the company increase its financial flexibility by retiring debts and investing in assets with more potential like the Permian Basin. This is going to improve the company’s cash flow per share from around $24 this year to $28 next year.
The company’s U.S. onshore assets have vast potential for growth, and these assets will be the main production driver for the company. It’s U.S. onshore assets primarily consist of the Permian and Central regions. These regions accounted for 26% of the company’s overall production in the first quarter of 2013, a figure that should grow to 28% by the end of this year. Apache Corporation (NYSE:APA) currently operates 60 rigs and plans to drill around 1,000 wells in this region by the end of this year, allotting 55% of this year’s spending to these projects. Overall production in this region will rise by 20% year-over-year in 2013.
Selling stake and the growth story