UPDATE:Apache Agrees To $2.7 Billion Purchase Of Deepwater Explorer Mariner

Apache Corp. (APA) announced an agreement to acquire Mariner Energy Inc. (ME) for $2.7 billion, moving the oil-and-gas explorer further into deepwater areas.

The disclosure comes days after Houston-based Apache agreed to buy the shallow Gulf of Mexico assets of Devon Energy Corp. (DVN) for $1.05 billion, a deal that reinforces Apache's dominant position in the area.

The acquisition highlights the blazing environment for oil and gas deals. After months of paralysis caused by volatile energy prices, tight credit and an uncertain economic environment, energy companies have been buying assets with gusto since the end of last year. The biggest deal was announced in December, when Exxon Mobil Corp. (XOM) said it would buy XTO Energy Inc. (XTO) for $31 billion. More recently, BP PLC (BP) bought Devon's deepwater Gulf of Mexico and offshore Brazil assets for $7 billion, and Sinopec struck a deal to buy ConocoPhillips' (COP) 9% stake in Canadian oil sands producer Syncrude for $4.65 billion.

Mariner, based in Houston, has a significant presence in the deepwater Gulf of Mexico. As of the end of last year, the company had interests in about 240 blocks on the continental shelf and 100 blocks in the deepwate Gulf. A growing share of the company's production comes from deepwater developments such as Geauxpher, Bass Lite and Northwest Nansen, Mariner said on its website. The company also has onshore properties in the Permian Basin and South Texas.

Mariner holders would get 0.17043 share of Apache and $7.80 for each share of Mariner, valuing the stock at $26.22, a level last seen when oil and gas prices began their plunge in the second half of 2008. The $26.22 figure is a 45% premium to Wednesday's closing price as is on top of the near-doubling the stock has seen the past year. Apache will also assume $1.2 billion of debt.

"A combination makes sense," as Apache would be able to "seamlessly integrate (Mariner's) shelf properties," said analysts with Tudor Pickering Holt in a research note. Tudor Pickering added, however, that its analysts were "surprised" at the premium.

Apache Chairman and Chief Executive G. Steven Farris called the purchase "a natural extension into the deepwater" Gulf of Mexico for the company. He went on to say, "We have considered extending our Gulf of Mexico operations into the deepwater for a number of years. This is the right set of assets and the right time for Apache to expand its deepwater presence."

Deepwater exploration has been ramping up industrywide as technology has made doing so less risky. Meanwhile, Mariner had been looking to boost its onshore operations, in December agreeing to a $215 million acquisition.

Apache shares closed at $108.06 Wednesday and were inactive premarket. The company will host a conference call at 9 am Central Time to discuss the acquisition.

-By Angel Gonzalez, Dow Jones Newswires; angel.gonzalez@dowjones.com

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