While it’s technically not an integrated giant, Apache (APA) is no slouch independent producer. Still, it has become something of a bloated giant. To that end, management at the company has begun the task of slimming down its waist line. APA has now raised around $7 billion via asset sales this year including about $3.5 billion worth of shallow, underperforming Gulf of Mexico assets.
Yet its latest sale could be the most transformational.
Apache recently agreed to sell a 33% interest in its Egyptian assets to Chinese firm Sinopec (SNP) for $3.1 billion. Egypt currently accounts for roughly 20% of Apache’s current production as well as 25% of its cash flows. Given the nation’s recent “issues” and political strife, it also was the main reason why shares have been falling behind its other rivals.
Yet, with the main obstacle to its success now perhaps behind it, Apache can focus on more stable operations in North America. APA already gets about 55% of its daily production from the safety of U.S. and Canada’s shores.
Once investors learned that Apache was putting the focus back on North America, shares popped 7.5%.