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Apache Corporation (APA), Devon Energy Corp (DVN): One Energy Company has Come Full Circle Looking for Growth

Photo credit: Apache (NYSE:APA)

With its growth options in the U.S. once limited, Apache Corporation (NYSE:APA)  turned its sights overseas. Over the course of 20 years the oil exploration and production company slowly built an impressive international operation. Then a strange thing happened. New technologies were developed that unlocked vast sums of oil and gas back in the U.S. Now that the tables have turned, Apache Corporation (NYSE:APA) is coming back home to grow.

That’s not to say the company is completely turning a blind eye to its international operations. Quite the contrary, it’s using the cash flow generated by these assets to fund its growth back home. That point couldn’t have been driven home more clearly by CEO Steven Farris at a recent conference as his number one message to investors and analysts seemed to be that the company is using the cash flow from its international assets to fund North American growth.

It has been a pretty remarkable transformation. Since 2009 its North American onshore business has grown from 32% of its production to 55% of production. The company sees that trend continuing in the future if for no other reason than it’s sitting on a simply massive resource base. The company sees it’s Permian and Central resources growing its reserves four fold as these plays are fully developed.

In looking at the Permian, Apache Corporation (NYSE:APA) has about 1.6 million net acres and has identified 34,518 future drilling locations. That provides it with decades of liquids-rich growth. In fact, over the last year alone it has grown its liquids production by 25% over the previous year.

In one sense Apache Corporation (NYSE:APA) is following in the footsteps of Devon Energy Corp (NYSE:DVN). The only real difference is that Devon Energy Corp (NYSE:DVN) completely exited its international operations to turn its full attention to its North American assets. Most of Devon Energy Corp (NYSE:DVN)’s attention is now on delivering oil production growth out of the Permian Basin. It’s using that play as a foundation to deliver 40% oil production growth in the U.S. this year. 

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