Apache to Buy Cordillera Energy
This deal will add power to Apache’s hold in the region, though Leo Mariani of RBC Capital Markets doesn’t think the terms of the deal are top notch:
“The ultimate price is $6,000 an acre and gas prices need to go up in the next few years for them to make money on this.”
As hydraulic fracturing, or fracking, has increased the supply of natural gas in the U.S., gas prices have fallen and will likely continue to do so.Cordillera’s development of the Anadarko basin includes a large number of fracking wells. Fracking has been under environmental scrutiny because of claims that it causes small earthquakes and pollution to drinking water.In the acquisition, Apache will pay $2.25 billion in cash. The additional $600 million will come from common stocks.This follows an announcement that Canadian Pembina Pipeline Corp (TSE: PPL) will purchase Provident Energy Ltd (NYSE: PVX).The consolidation of these energy companies is enabling increased domestic development, something that will decrease dependence on foreign oil, particularly from OPEC.Apache was up 0.71% on Monday to $97.49.That’s all for now,Brianna