Apache lands Shell-owned Gulf of Mexico assets

Gary Park, Petroleum News Calgary correspondent

Apache continued on its acquisition trail with a $500 million deal to acquire a basket of maturing Shell holdings on the outer continental shelf of the Gulf of Mexico.

In the same year that it paid $1.3 billion for aging BP assets in the gulf and U.K. North Sea, the Houston-based independent has paid $200 million to close the purchase and increase its reserves by 125 billion cubic feet of natural gas and 6.6 million barrels of oil from 15 operated and 11 non-operated interests.

Before the deal, Morgan Stanley paid Shell $300 million to acquire an overriding royalty interest in a portion of the lower-risk reserves to be produced over the next four years.

Daily output from the properties is expected to average 70.4 million cubic feet of gas and 4,600 barrels of oil for the second half of 2003, with two-thirds flowing from five fields that will be wholly owned by Apache.

Apache Chief Executive Officer Steven Farris said the Shell holdings “lay down well” with his company’s existing gulf properties, with several being in the same vicinity as the recently acquired BP interests.

He said Apache intends to maximize production and add new reserves at the “capital-constrained” properties.