2nd UPDATE: Apache To Pay $2.7Bln For Deepwater Explorer Mariner

Apache Corp. (APA) said Thursday it will acquire Mariner Energy Inc. (ME) for $2.7 billion, a move that could help transform the Houston-based company into the largest independent U.S. oil and gas company when ranked by production level.

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.

Apache's current production will increase 12.8% to 663,700 barrels of oil equivalent per day after the two acquisitions, surpassing Devon Energy Corp., which is divesting many assets to focus on North American onshore production. Other large independents, so-called because they produce oil and gas but don't have any refining operations, include Chesapeake Energy Corp. (CHK), Anadarko Petroleum Corp. (APC), and Occidental Petroleum Corp.

The Mariner deal 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 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 and is on top of the near-doubling the stock has seen the past year.

The deal is expected to close in the third quarter.

Apache will also assume $1.2 billion of debt. The deal, which represents Apache's first corporate acquisition in 14 years, allows the company to gain a strategic position in the deep waters of the Gulf of Mexico. It "gives Apache a new growth area in the U.S. to have meaningful oil and gas production over a long term," Apache Chief Executive G. Steven Farris said in a conference call with analysts.

Farris said it was the right time to enter the area as new technologies had reduced the risk and costs of exploration. The executive said Mariner was the "perfect fit" for Apache because they have operations in the same areas, such as the shallow waters of the Gulf and the Permian basin in Texas. Additionally, Mariner has acreage in Niobrara Shale in Wyoming, an asset that gives Apache exposure to an emerging region for oil exploration, the company said.

The premium Apache paying is "unusually high" and it reflects the perfect fit Mariner represents for the company's portfolio, says Fadel Gheit, analyst at Oppenheimer & Co. Inc. The acquisition also consolidates Apache's gradual departure from being a mainly exploitation company to one willing to take more risks exploring for new reserves, Gheit said.

"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.

Many analysts were also surprised when an Apache employee inadvertently sent an e-mail late Wednesday, which said the merger had closed and provided call-in information for Thursday's conference call. The e-mail was immediately recalled, but Apache executives acknowledged its effect on the analyst community.

"We can't tell you how pleased we are to confirm you the rumors of the Mariner transaction that we prompted by our premature email last night," said Apache president Roger Plank.

Federal disclosure regulations say that unintentional disclosures to selected numbers of people must be "promptly" disseminated to the general public. Analysts received the e-mail at about 6:30 p.m. CDT, and the company's press release was issued at 7:05 a.m. CDT.

Apache spokesman Bill Mintz said the e-mail disclosure was "inadvertent," and that since it came after the market closed on Wednesday and the company issued its press release before the market open the following day, there was "no harm, no foul."

In a note to clients, J.P. Morgan, who was the financial advisor to Apache, said "the transaction supports the company's focus of increasing growth of its North America portfolio."

Analysts from Jefferies & Company, Inc. said in a note to clients that it's unlikely there will be a wave of consolidations in the Gulf of Mexico as Mariner assets were unique among the largest producers and because there are few buyers committed to the area.

Deepwater exploration has been ramping up industry wide 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 were recently trading 1.52% down to $106.4, while Mariner's shares were 41% up to $25.60.

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

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