A new player in Alaska's oil industry is nudging its way into the lineup of companies that have become household names in the Last Frontier. Look out, Exxon Mobil, BP, Royal Dutch Shell, ConocoPhilips and Chevron: A new independent player akin to Pioneer and Anadarko is looking for an in.
This May, Houston-based Apache Corp. began the groundwork for a tangible presence in the state when it formed a new company -- Apache Alaska Corp. -- in preparation to gain a lease stake in Cook Inlet, and it appears it's made good on that goal. Although the Alaska Department of Natural Resources has no immediate record of a transaction conveying leases to Apache, the company confirmed Monday it had recently acquired acreage in Cook Inlet. The company felt the region had potential and decided to "go ahead and lease," according to Robert Dye, Apache's vice president of corporate services.
Dye isn't as forthcoming about current speculation that the Fortune 500 company is also negotiating a $12 billion opportunistic pounce to acquire assets from BP, capitalizing on BP's need to raise a pile of cash to cope with the financial fallout from its disastrous oil spill in the Gulf of Mexico. "We don't comment on any rumors regardless of the validity of the statement," he said.
BP spokesman Steve Rinehart also declined to comment on what he termed "market speculation," and reminded us that BP had, in June, announced plans "to pursue certain divestments up to $10 billion." BP, he said, expected those divestments to be "mainly non-core upstream assets that do not fit our long term growth strategy."
Rinehart declined to elaborate on whether any of its holdings in Alaska, in the company's estimation, fit that description.
"It's very probable that (Apache is) talking to BP about something," said Phillip Dodge, an investment analyst with Thuoy Brothers who says he has watched Apache for a long time. Whether any of BP's Alaska portfolio is in the mix remains to be seen. BP has properties across the globe and onshore in the United States that it may also be willing to part with, Dodge said.
"One thing we can be sure of," he said. "If BP sells it will have to be for less than it's worth."
Which is exactly the type of business deal Apache likes to make.
The oil and gas company that is little known here in the Last Frontier has spent the last 55 years making a name for itself as an aggressive explorer, and the mantra "acquire and exploit" has dominated its last two decades of steady growth. Its current mission statement, posted on the company's website, is to "grow, succeed, innovate -- and do it faster than the guys down the street."
Although it has maintained an active business presence in Alaska -- at least on paper -- since 1958, Dye believes the Cook Inlet leases are Apache's first resource acquisition within the state. The company formed in the mid-1950s in Minnesota and went on to drill its first wells in Oklahoma, where it was headquartered until moving to Denver, Colo. and then to its present home base -- Houston, Texas.
At $10-$12 billion, a BP acquisition would by far be Apache's largest purchase and could expand the compay's market capitalization by 33%, Dodge said. In 2009 it posted $8.6 billion in revenue, listed $28 billion in assets and produced more than 278,000 barrels of oil per day and 1.7 million cubic feet of gas per day, according to the company's 2009 annual report. Dodge describes the company as a U.S. independent that has successfully branched out globally.
The company describes itself as "an independent energy company that explores for, develops and produces natural gas, crude oil and natural gas liquids."
In the last two decades it has spent more than $9.2 billion making major acquisitions in the U.S. and abroad, with BP, Shell Oil and Anadarko among the sellers.
"In North America, our exploration and production interests are focused in the Gulf of Mexico, the Gulf Coast, East Texas, the Permian basin, the Anadarko basin and the Western Sedimentary basin of Canada. Outside of North America, we have exploration and production interests onshore Egypt, offshore Western Australia, offshore the United Kingdom in the North Sea, and onshore Argentina. We also have exploration interests on the Chilean side of the island of Tierra del Fuego," the company states on its website.
This year, Apache has already spent more than $1 billion acquiring additional assets in the Gulf of Mexico from Devon Energy, and it has a $2.7 billion plan to merge with Mariner Energy, which operates in the Permian Basin, Gulf Coast and the Gulf of Mexico.
"It looks like Apache is on the hunt for new properties," observed Kevin Banks, director of Alaska's Division of Oil and Gas.
Banks, like Dye and Rinehart, believes the rumors about Apache swooping in to purchase any of BP's Alaska assets are wildly premature and amount to "rank speculation." But he admits Apache is a company he wouldn't mind rolling out the welcome mat for, particularly in Cook Inlet.
"As long as it's big enough and able to meet the requirements of our leases and is interested in spending money in Alaska, those are the kind of companies we should welcome here," he said.
The company has a reputation for good works beyond tactical business moves. It provides sabbaticals for teachers, builds schools in Egypt and plants trees in states in need of environmental restoration.
"I certainly don't think that Alaskans should be concerned," said Dodge of the prospect, however remote, of Apache becoming an owner on the North Slope. (A prior version of this story incorrectly attributed the preceding statement statement to Robert Dye.) "Apache is a very classy, civic minded company. They like to make money also but they also have a conscience. They would probably spend as much or more in Alaska as BP has spent in recent years."
Contact Jill Burke at jill(at)alaskadispatch.com.