May 9 (Bloomberg) -- Apache Corp., this year’s third-worst performing oil and natural gas producer on Standard & Poor’s energy index, plans to sell $4 billion in assets by the end of this year and buy back shares.
Apache, based in Houston, will use initial proceeds of $2 billion to pay down debt, according to a statement today. The balance may be used to buy back as many as 30 million shares.
Apache didn’t identify the assets it intends to sell and said deals may include divestitures or joint-venture agreements. Chairman and Chief Executive Officer Steve Farris said in a March 18 interview that all assets were up for review as it pursued at least $2 billion in asset sales after a $16 billion acquisition spree that began in 2010 and continued into last year.
“The asset list that we have generated, at today’s prices and our market expectations, would exceed that $4 billion,” Farris said on the call. “Long term, we want to have a more predictable growth profile.”
Apache may be able to sell more than $4 billion in assets, Eliot Javanmardi, an analyst with Capital One Southcoast in New Orleans, said in a telephone interview.
“Investors are pleased to see Apache taking the steps they announced this morning, as it should help move the stock in the right direction,” said Javanmardi, who doesn’t own Apache shares and has an add, or buy, rating on them. The company may look to sell some holdings in the Gulf of Mexico and Australia, he said.
Apache climbed 4.8 percent to $81.47 at the close in New York, the biggest gain since Jan. 3, 2012.
In March, Farris said a sale of deep-water Gulf of Mexico assets would depend on market conditions. Patrick Cassidy, an Apache spokesman, declined to comment on any additional assets that may be sold in a telephone interview today.
Only cash from joint ventures would count toward the $4 billion goal, Farris said on the call. Savings from a partner picking up Apache’s development costs, known in the industry as drilling carry, wouldn’t count, he said.
Apache reported first-quarter net income fell 10 percent to $717 million, or $1.76 a share. Excluding one-time items such as adjustments to the value of forward contracts and property writedowns, profit was $2.02 a share, 19 cents less than the average of 27 analysts’ estimates compiled by Bloomberg.
First-quarter daily production equivalent to 781,819 barrels of oil missed expectations by about 1.6 percent, Hsulin Peng, an analyst for Robert W. Baird & Co. in Stamford, Connecticut, wrote today in a note to clients. Cyclones interrupted output in Australia, Apache said.
Apache operates in the U.S., Canada, North Sea, Western Australia, Egypt and Argentina, according to the company website.
Newfield Exploration Co. and QEP Resources Inc. are the two worst-performing stocks on the S&P 500 Oil & Gas Exploration & Production Index this year.
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