I last talked about Apache in November mentioning their large US resource base and efforts to monetise their portfolio via deals with companies like Sinopec. This continued yesterday with the announcement that it had sold its Argentine business, in full, to the state-owned YPF for US$800m. Given the macro issues in Argentina recently, that sounds like a market pleasing deal.
Here's one interesting observation from the deal. US$800m is about 2% of the company's EV. Argentina accounts for 6% of the company's production but only about 2% of total proved reserves (including the Permian reserves). My view is that it would have been viewed as a macro-volatile interest and it is better to get it off the book - and interestingly they managed to do it at the 'average' price their whole reserves are valued at (as per the Apache EV).
Quarterly results are also out today. The headlines did not look great, however:
'Apache Corp. (APA): Q4 EPS of $1.57 misses by $0.23.Revenue of $3.58B (-19% Y/Y) misses by $90M'
So what went wrong? Well, back in January, the company mentioned that bad weather had impacted their production
Note some other important 'facts' above though. The Permian and Central energy producing regions of the US are now 33% of total company production over the year (and 55% in Q4). Growth here helped the company to have a 'near 4%' organic growth in proved reserves.
Now this evolution can be seen below. The aforementioned sale of the Argentine interests just accentuates this further.