Apache Corp. is rumoured to be mulling a potential sale of its deepwater US Gulf assets that could be worth anywhere between US $2-3 Bn, although a sale of these properties so relatively soon after acquiring them as part of the company's $2.4 Bn Mariner Energy deal in 2010 would be a surprise.

The company is believed to want to step up its focus on its booming and lower cost, higher return onshore North American assets, but is not commenting at this early stage. It has however previously noted in its last fourth quarter earnings press release that it planned to sell $2 Bn in assets. “When we have something concrete to share, we will do so,” said Apache spokesman Bill Mintz, according to Bloomberg.

There is a solid commercial reason for considering lowering, if not entirely offloading, its deepwater GoM exposure. The cost of drilling wells in the GoM has risen substantially as operators have had to meet heightened safety and regulatory requirements following the Macondo tragedy. Michael Yeager, CEO of BHP Billiton Petroleum, said at the recent IHS CERAWeek conference in Houston that his company’s GoM wells now cost about $170m to drill, up from $120m before the Deepwater Horizon incident.

Producing oil and gas from onshore shale formations is essentially less technically challenging, lower cost and more profitable. Apache picked up valuable drilling acreage in the Permian Basin of West Texas as part of the Mariner deal.

Apache drilled one operated well and participated in five non-operated wells in the GoM last year, the latter including Anadarko Petroleum’s Lucius and Heidelberg fields, both to be developed via identical production spars. Its 2013 expenditure on the deepwater GoM is estimated at around $400m.

Although Apache’s GoM total production averaged around 10,000 b/d of oil and liquids and 48 MMc/d of gas, that is only about 2% of its overall production. With production at this level it is doubtful it could attain a sale price of $3 Bn for its deepwater assets, which span around 900,000 acres.

However, with fields such as Lucius and Heidelberg to be onstream in the next year or two, there are cash-rich companies such as China’s CNPC and India’s ONGC who are keen to enhance their exposure to the US Gulf. Analysts at investment bank Tudor Pickering Holt & Co. put the value of the assets at $3 Bn, while Simmons & Co estimate it nearer to $2 Bn.

Apache invested more than $16 Bn buying assets between 2010 to 2012 around the world, and is keen to pay down some of its debt.

Its head may also have been turned by the $5.55 Bn deal that BP clinched for the sale of some of its deepwater assets to Plains E&P last year, although those fields were producing 60,000 boe/d.

Offshore