World Oil
(WO) – APA Corporation and Callon Petroleum Company have entered into a definitive agreement under which APA will acquire Callon in an all-stock transaction valued at approximately $4.5 billion, inclusive of Callon’s net debt. Under the terms of the transaction, each share of Callon common stock will be exchanged for a fixed ratio of 1.0425 shares of APA common stock.
The transaction is expected to be accretive to all key financial metrics and add to APA’s inventory of high quality, short-cycle opportunities. Callon’s assets provide additional scale to APA’s 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 boed and enterprise value increases to more than $21 billion.
“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,” said John J. Christmann IV, APA’s CEO and president. “The acquisition is accretive and unlocks value for both shareholder bases, as increased scale will enable us to realize significant overhead and cost-of-capital synergies. The pro forma footprint in the Permian will also create opportunities to capture meaningful operating synergies.”
“We are very proud of the significant steps we have taken to enhance Callon’s asset base, operational performance and balance sheet over the past several years,” said Joe Gatto, Callon’s president and CEO. “This combination with APA now provides for an enhanced value proposition for our shareholders built on their depth of experience and strong execution in the Permian basin, flexibility for increased capital allocation, and ongoing delineation and optimization efforts.”
Combined Permian asset position and preliminary 2024 planned activity. Pro forma average daily Permian basin production was 311 MMboed in Q3 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 Q3 2023, on a pro forma basis.
Pro forma APA positioning. “APA has a proven ability to deliver strong results from its unconventional assets in the Permian basin, and we look forward to building on the progress that the team at Callon has made within its asset base. This transaction is aligned with our strategy of maintaining and growing a diversified portfolio, underpinned by large-scale core areas of operation while continuing to build a portfolio of medium and longer-term exploration-driven development opportunities,” Christmann said.
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.
APA Corporation owns consolidated subsidiaries that explore for and produce oil and natural gas in the United States, Egypt and the United Kingdom and that explore for oil and natural gas offshore Suriname.
Callon Petroleum Company is an independent oil and natural gas company focused on the acquisition, exploration and sustainable development of high-quality assets in the Permian basin in West Texas.
