(APA) Apache Secures Exploration Rights

As per market sources, Apache Corporation (APA) has won oil and gas exploration rights in the vast acreage of Alaska’s Cook Inlet. The company was the sole bidder for the three-lease package offered by the Alaska Division of Oil and Gas. Apache submitted the bid at $613,690, or $70 per acre.

These leases, acquired by Apache, were offered as a bundle and are subject to special conditions. These include immediate submission of a detailed drilling layout and a completed well within four years.

The properties won by Apache also include a section of the Cosmopolitan field that was developed by Pioneer Natural Resources Company (PXD). Of the four lease rights held by Pioneer, it had handed over three and retained one core lease.

Houston, Texas-based Apache aims to explore the untapped oil reserves in the inlet, which is the oldest oil and gas producing basin of Alaska. Prior to this acquisition, the Alaskan unit of the company has operated on over 300,000 acres in Cook Inlet leases.

Integrated energy firm Apache is engaged in exploration, development and production of natural gas, crude oil and natural gas liquids. The company’s U.S. operations are focused on some of the nation’s most prolific producing basins, including the outer continental shelf of the Gulf of Mexico, the Anadarko basin of Oklahoma, the Permian basin of West Texas and New Mexico, the Texas-Louisiana gulf coast and East Texas.

We believe that Apache’s large and geographically diversified reserve base, its balanced exposure to natural gas and crude oil, as well as healthy financial position provide long-term growth visibility.

However, taking into account the company’s sensitivity to gas/oil price volatility, high drilling costs, geo-political risks and project timing delays, we foresee limited upside potential for the shares. As such, we expect Apache to perform in line with the broader market and, therefore, maintain our Neutral recommendation.

Apache currently retains a Zacks #3 Rank (short-term Hold rating).

APACHE CORP (APA): Free Stock Analysis Report

PIONEER NAT RES (PXD): Free Stock Analysis Report

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