The $18 billion oil and natural gas company, Apache Corp has received an unsolicited takeover approach on account of its recent financial setbacks, the inside sources said.
The Houston-based company has rejected the initial offer and is working with financial adviser Goldman Sachs Group Inc. on defense, said the sources, who asked not to be identified. The potential buyer sent a letter to Apache in the past few weeks and it’s unclear whether talks would resume, one of the source said.
The spokesman for Apache couldn’t immediately be reached for comment outside of regular business hours. A representative for Goldman Sachs declined to comment.
Apache on Nov 5 reported a smaller-than-expected adjusted loss and boosted its 2015 production forecast. It’s one of the biggest leaseholders in the Permian Basin in western Texas, the largest US shale play and the only one where oil output has continued to grow even as drillers slash spending and idle rigs. It also explores in Egypt, the Gulf of Mexico, Canada and the Eagle Ford and Woodford shale basins in the US.
A deal for Apache would be the largest for an independent oil and gas producer in the US this year. Noble Energy Inc. bought Texas shale driller Rosetta Resources Inc. for $3.9 billion, including assumed debt, in an all-stock transaction in July.
Apache’s shares have fallen 54 percent from their 2014 peak as crude prices have crashed amid a global supply glut. It’s part of a larger sell-off in exploration and production companies, with an S&P index of 17 drillers down 28 percent in the past year. The shares closed at $47.67 on Friday in New York.
A high-flying producer during the shale boom of the 2000s, it has chronically under-performed in recent years, largely because of bad bets on major projects in Argentina and Australia that didn’t pan out. Apache, which appointed a new chief executive in January, has been selling off lackluster properties in Texas and Australia.
Apache had a net loss of about $5.7 million in the third quarter, compared with a net loss of about $1.3 million a year earlier, according to its latest earnings report. The company has cut it its 2015 capital budget by more than 60 percent from a year earlier, according to an investor presentation in September.
