The Permian Basin

Although Apache was an acquisitive company throughout its history, the 1990s brought a new approach for the strategy based on systems for managing and incentivizing production and exploration activities. Apache’s strategy also got a new name – “acquire and exploit.” In 1991, Apache acquired the MW Petroleum assets from Amoco, buying Apache a position in the Permian Basin of West Texas and eastern New Mexico – one of the world’s largest oil provinces. The transaction was completed through a unique (for its time) price support system that protected Apache if commodity prices fell but provided Amoco with a share of the upside if prices rose. The structure became a case study for the Harvard Business School, “Bridging the Gap Between Buyer and Seller: MW Petroleum Corporation.” After the acquisition, Apache moved its headquarters to Houston, the center of the global oil and gas industry. Utilizing the management and incentive systems introduced by Merelli and Farris to optimize production from existing wells and identify development opportunities, Apache’s “acquire and exploit” methodology added value to properties acquired from Occidental Petroleum, Dow Chemical, Amoco (MW) and Texaco.

Apache’s strategy to invest in international exploration and production, which began in 1988, yielded its first operated production in the Carnarvon Basin offshore Western Australia with the 1993 acquisition of Hadson Energy Resources. The transaction provided Apache with operational control of Varanus Island, a strategic processing and transportation hub off the Western Australia coast.

Recognizing that Canada’s energy market was converging with the larger U.S. market, Apache acquired Dekalb Energy Canada Ltd and established a new core area in the Western Sedimentary Basin. The region expanded with the 1999 acquisition of Shell Canada’s Plains business unit – which led to the Ladyfern discovery – and again with purchases from Phillips Petroleum and Fletcher Challenge. Twenty-five years earlier, Apache had divested prior holdings in Canada when the government adopted policies unfriendly to foreign investment.

G. Steven Farris was named Apache’s president and chief operating officer in 1995.

Apache entered Egypt in 1993 by acquiring a 25 percent non-operated interest in the Qarun Concession alongside the Phoenix Resource Companies. In 1996, Apache merged with Phoenix Resources and took over operations of the Qarun Concession. The Phoenix merger brought a non-operated interest in the much larger Khalda-area concessions, then operated by Repsol, the Spanish oil giant.

In 1997, Apache was added to the S&P 500, an index that is widely regarded as the best single gauge of large-capitalization U.S. equities.

The 1977 North Block farm-in included the Stiles Ranch field in Wheeler County in the Texas Panhandle. The Bartz 19-1, drilled in 1997, was the first test of the Atoka and Granite Wash horizons. In 2009, horizontal drilling and multi-stage hydraulic fracturing brought new life to the Granite Wash.

The 1999 acquisition of Shell assets on the Gulf of Mexico Shelf was the first of several asset transactions with Shell, BP, Occidental Petroleum, Anadarko Petroleum and Devon Energy that built the largest operating portfolio in the Gulf’s shallow waters. Gulf of Mexico operations provided significant cash flow that was deployed to fund international growth.

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