Another Permian deal announced

Image: APA’s Apache Midland field in west Texas. The company said it was acquiring rival Callon Petroleum in an all-stock transaction valued at US$4.5 billion. (Image: APA)

APA Corp. will acquire Callon Petroleum, which is focused on the Delaware Basin within the Permian, for US$4.5 billion.

APA said Callon’s assets provide additional scale to its operations across the Permian Basin, most notably in the Delaware Basin, where Callon has nearly 120,000 acres. On a pro forma basis, total company production exceeds 500,000 BOE per day and enterprise value increases to more than US$21 billion.

“This transaction is aligned with APA’s overall portfolio strategy and fits all the criteria of our disciplined approach to evaluating external growth opportunities,” said John J. Christmann IV, APA’s CEO and president. “Callon has built a strong portfolio in the Permian Basin that is complementary to our existing Permian assets and rounds out our opportunity set in the Delaware.”

Pro forma average daily Permian Basin production was 311 Mboe/d in 3Q 2023, which represents a 48% increase from APA’s Permian Basin production on a standalone basis. APA’s oil production as a percentage of BOE’s in the Permian increases from approximately 37% to 43% in 3Q 2023, on a pro forma basis.

APA said it will provide additional activity plans and details post closing.

2024, subject to customary closing conditions, termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and approval of the transaction by shareholders of both APA and Callon. Upon the closing of the transaction, a representative from Callon will join the APA board. APA’s executive management team will lead the combined company with the headquarters remaining in Houston, Texas.

Following the closing, the company’s worldwide pro forma production mix will be approximately 64% U.S. / 36% international.

APA’s global portfolio includes ongoing development on large-scale legacy assets in the U.S. and Egypt. The company is also advancing a FEED process for a large-scale FPSO development offshore Suriname. In addition to current production and development activities across the globe, APA maintains a differentiated exploration portfolio, which includes newly acquired large-scale blocks offshore Uruguay and onshore state-land leases in Alaska.