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|Subject: Apache, part 1||Date: 1/26/2004 3:08 PM|
|Author: HamletsMill||Number: 28029 of 46903|
Since there was some interest in examining Apache here, and it presently is one of my larger long term holdings (I first bought APA in 1995), I thought I would start this research thread.
Apache Corporation is one of the largest independent oil and gas exploration and development companies with operations in the United States, Canada, Egypt, Australia, the United Kingdom North Sea, China and Argentina.
It is, in the energy industry, a "pure-play". That is, its revenue stream derives principly from it production of oil and gas -- it doesn not refine or retail to any extent.
One of the distinctive features of Apache is its relative youth, compared to its peers It was started 50 years ago in Minneapolis, Minn. Raymond Plank, the current chair, was one of the three co-founders. It started its oil operations with a small production of 800 barrels per day in Oklahoma and Kansas. Presently it produces 800 barrels of oil equivalent in about three minutes – with operations in seven countries.
For several decades it was a diversified company, itMi> “grew oranges and sold auto parts in California, manufactured walnut rifle and shotgun stocks in Iowa and vehicle doors in New York and owned a Nebraska radio station, a Wyoming cattle company and dude ranch, shopping centers and telephone exchanges.” But oil and gas was always the key operation.
It went public as an IPO in 1969. In 1987, it moved its corporate headquarters to Denver – also in that year it sold its last no oil-related business – agricultural property in California. In 1992, it shifted again, this time to Houston.
During the 1990's, Apache increasingly focused on and became the premiere "acquire and exploit" company in the industry; acquiring hundreds of “mature” oil fields from the major producers and through a highly capable workforce and management often enhancing the production of those fields beyond what their former owners were able to get out them – and thereby reaping profits.
Unlike most of its peers, this aggressive strategy of growth through acquisition – funded in considerable part by secondary offering of stock and successful reinvestment of the proceeds – makes it almost unique in its industry.
“As of December 31, 2002, the Company had total estimated proved reserves of 637 million barrels of crude oil, condensate and natural gas liquids (NGLs) and 4.1 trillion cubic feet (Tcf) of natural gas. Combined, these total estimated proved reserves are equivalent to 1.3 billion barrels of oil or 7.9 Tcf of gas.”
In North America, Apache fields are in the Gulf of Mexico (inner and outer continental shelf), the Permian Basin (West Texas, USA), the Anadarko Basin (West central Oklahoma), and the Western Sedimentary Basin (Canada).
These fields are the greatest source of income for APA, and account for the bulk of estimated proven reserves.
Egyptian operations are a significant part of Apache, providing 22% of production revenues and having 10% of total proved reserves ( December 31, 2002).
In Australia, APA 18.2 Mmboe (million barrels of oil equivalent), about 15% of Apache's total production for 2002. Estimated proved