Smart acquisitions will fuel Apache

Article Excerpt

APACHE CORP. $107 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 336.6 million; Market cap: $36.0 billion; Price-to-sales ratio: 4.1; Dividend yield: 0.6%; WSSF Rating: Average) produces oil and natural gas from properties in the U.S., Canada, the U.K., Australia, Egypt and Argentina. Roughly 50% of its production is oil, and 50% is natural gas. The company is expanding its offshore oil-drilling operations in the Gulf of Mexico, which account for roughly 20% of its production. Offshore drilling is riskier than onshore operations, but Apache has a long history of success in this region. Big purchases look promising Apache recently agreed to buy Mariner Energy Inc. (New York symbol ME) for $2.7 billion in cash and stock. Mariner has reserves of 181 million barrels of oil equivalent (including natural gas). Besides offshore fields in the Gulf of Mexico, Mariner has onshore properties in Texas and New Mexico. Apache will also assume $1.2 billion of Mariner’s debt. The deal should close…