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Apache Corporation (APA), Occidental Petroleum Corporation (OXY): Don’t Miss Out on These Three Oil Exploration and Production Companies

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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?

Apache Corporation (NYSE:APA)

Sailing out of Gulf of Mexico and anchoring in the U.S.

Apache Corporation (NYSE:APA)’s decision to sell its Gulf of Mexico (GoM) assets for $3.75 billion is a part of $4 billion divestiture plan. This transaction should close by September 2013. In the first quarter, GoM shelf production was 92 million barrels of oil equivalent (MBOE) per day which consists of 47% oil, 7% NGL, and 46% gas. The reserves in the shelf dropped from 293 MBOE in 2010 to 237 MBOE in 2012, however.

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

Anadarko Petroleum Corporation (NYSE:APC) is selling 10% out of its 36.5% stake in the offshore gas fields of Mozambique. The sale could fetch the company a minimum of $2.5 billion, which it will use for two purposes. First, it can retire some of its $13.6 billion debt. Second, it can fund the construction and development of a liquefied natural gas (LNG) terminal for receipt, storage, and supply of LNG; this terminal will cost an estimated $15 billion. Mozambique has an estimated reserve of 150 trillion cubic feet of gas.
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