Apache Resists Unsolicited Takeover Bid

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Charles Kennedy, Oilprice.com

Apache Corporation, a Houston-based oil and gas exploration company, says it has fended off an unsolicited takeover bid, and will continue to defend against follow up attempts to buy out the company.

Bloomberg reported the news, and thus far the bidder has not been identified. The company’s shares jumped on the news, up more than 10% during midday trading Monday. Apache is worth about $18 billion, so if a takeover were to occur, it would be the largest for an independent oil and gas company this year.

Apache reported its quarterly earnings on Nov. 5, beating expectations because of rising production. It still reported a large loss of $5.7 billion for the quarter, however, including a $3.7 billion impairment charge because of low oil prices as well as other write-downs. Excluding one-time charges, Apache only posted a net loss of about $21 million, or $0.05 per share.

All this considered, it wasn’t a bad quarter. A large chunk of Apache’s production takes place in the Permian Basin in West Texas, one of the few remaining oil and gas basins in North America that are still profitable even with crude prices at $50 per barrel. Nevertheless, Apache has slashed capital spending by over 60% this year in order to trim its losses.

It is unclear if there will be further attempts to take over the Texas driller. Apache is working with Goldman Sachs to play defense against more unsolicited takeover bids.

The Wall Street Journal reported banks are having trouble selling off loans they made for merger and acquisition (M&A) acquisitions. Although there has been a lot of activity in the M&A space, interest in high-yield debt is cooling, making it difficult for banks to unload loans they have made for takeovers. This is a phenomenon that is occurring in more than just the energy sector, but M&A activity could slow down as buyers of risky debt grow more cautious.

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