- Filing of certain prospectuses and communications in connection with business combination transactions (425)
July 21 2010 - 6:04AM
Edgar (US Regulatory)
Filed by Apache Corporation
Pursuant to Rule 425 of the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Mariner Energy, Inc.
Commission File No. 333-166964
PERMIAN CANADA EGYPT
Global Transaction with BP plc
July 20, 2010
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Cautionary Statement
2
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.
Apache has filed with the Securities and Exchange Commission ("SEC") a registration statement on Form S-4 containing a preliminary proxy
statement of Mariner Energy, Inc. ("Mariner") that also constitutes a preliminary prospectus of Apache. A definitive proxy statement/prospectus
will be mailed to stockholders of Mariner. Apache and Mariner also plan to file other documents with the SEC regarding the proposed
transaction. INVESTORS AND SECURITY HOLDERS OF MARINER ARE URGED TO READ THE DEFINITIVE PROXY
STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors
and security holders will be able to obtain the documents (when available) free of charge at the SEC's web site, www.sec.gov. Copies of the
documents filed with the SEC by Apache will be available free of charge on Apache's website at www.apachecorp.com under the tab "Investors"
or by contacting Apache's Investor Relations Department at 713^296^6000. Copies of the documents filed with the SEC by Mariner will be
available free of charge on Mariner's website at www.mariner^energy.com under the tab "Investor Information" or by contacting Mariner's Investor
Relations Department at 713^954^5558. You may also read and copy any reports, statements and other information filed with the SEC at the
SEC public reference room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at (800) 732-0330 or visit the SEC's
website for further information on its public reference room.
Apache, Mariner, their respective directors and executive officers and other persons may be deemed, under SEC rules, to be participants in the
solicitation of proxies from stockholders of Mariner in connection with the proposed transaction. Information regarding Apache's directors and
officers can be found in its proxy statement filed with the SEC on March 31, 2010, and information regarding Mariner's directors and officers can
be found in its proxy statement filed with the SEC on April 1, 2010. Additional information regarding the participants in the proxy solicitation and
a description of their direct and indirect interests in the transaction, by security holdings or otherwise, will be contained in the definitive proxy
statement/prospectus and other relevant materials to be filed with the SEC when they become available.
Forward-Looking Statements
Statements in this document include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. The opinions, forecasts, projections, future plans or other statements
other than statements of historical fact, are forward-looking statements. We can give no assurance that such expectations will prove to have
been correct. Actual results could differ materially as a result of a variety of risks and uncertainties, including: the timing to consummate the
proposed transaction; the risk that a condition to closing of the proposed transaction may not be satisfied; the risk that a regulatory approval that
may be required for the proposed transaction is not obtained or is obtained subject to conditions that are not anticipated; negative effects from
the pendency of the merger; our ability to achieve the synergies and value creation contemplated by the proposed transaction; our ability to
promptly and effectively integrate the merged businesses; and the diversion of management time on transaction-related issues. Other factors
that could materially affect actual results are discussed in Apache's and Mariner's most recent Forms 10-K as well as each company's other
filings with the SEC available at the SEC's website at www.sec.gov. Actual results may differ materially from those expected, estimated or
projected. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update or revise any
of them in light of new information, future events or otherwise.
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2Q Financial Highlights
3
Earnings of $860 MM ($2.53/share); up 22% to prior quarter
Record production up 10% sequentially to 647 Mboe/d
Cash Flow up 17% to $1.83 Bn
Cash balance stands at $1.8 Bn
2Q period-end Debt-to-Cap of 22%
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Strategic exit by BP creates expansion opportunity in 3 core Apache
regions: Permian, Canada, Western Desert of Egypt
Long-lived legacy properties with 12.7 year proved reserve life
Quality assets provide drilling, optimization opportunities
Pipeline of development projects
Large resource potential in new plays
Extensive acreage and exploration portfolio
Associated midstream assets
Talented and experienced staff
Plays to Apache core competence of adding value to underworked assets
Committed to a balanced and conservative financing plan
Transaction Highlights
4
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BP Transaction Terms
5
Acquisition of 3 entire BP regional E&P businesses:
Entirety of Permian Basin
Canadian upstream business, excluding oil sands and NGLs
Entirety of Egyptian Western Desert
Transaction value: $7.0 billion
$5.0 billion deposit to be made 30 July
Expected Q3-Q4 2010 closings, subject to regulatory clearances
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6
Production (1H2010 Net) Production (1H2010 Net) Production (1H2010 Net) Reserves Reserves Reserves
Oil+NGLMB/D Natural GasMMCF/D TotalMBOE/D P1 MMBOE P2 MMBOE P1+P2MMBOE Net Acres(Thousand)
Permian 15.1 80.6 28.5 140.9 42.6 183.5 763
Canada 6.5 239.9 46.5 223.7 134.2 357.9 1,278
Egypt 6.0 10.6 7.8 20.2 4.3 24.5 394
Total 27.7 331.0 82.8 384.8 181.1 565.9 2,435
All figures except Reserves based on BP disclosures and estimates. Permian net acres includes 405K Net Mineral Acres.
Asset Summary
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7
Evaluation of Acquired Businesses
(CHART)
$BN
Proved
Reserves
Probable
Reserves
Acreage
Midstream
Exploration
ProvedReserves ProbableReserves Total
MMBOE 384.8 181.1 565.9
$/BOE 13.38 4.62 12.37
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BP Permian E&P
8
Extensive portfolio across basin
Excellent fit
Attractive acreage position: 763K net acres
incl. 405K mineral acres
No operated wells drilled in 4 years
>2,000 infill drilling locations
Resource plays: Yeso, Spraberry
Expands APA's interest in key fields: Eunice,
NMFU, NEDU, Warren, etc.
APACHE + MARINER BP PERMIAN COMBINED REGION % CHANGE
Oil+NGL MB/D 47.0 15.1 62.1 32%
Natural Gas MMCF/D 108.2 80.6 188.7 74%
Total Prod. MBOE/D 65.0 28.5 93.5 44%
P1 Reserves MMBOE 555.1 140.9 696.0 25%
Net Acres 000s 731 763 1,494 104%
Apache
BP
Mariner
Production figures are 1H 2010. Mariner production rate January-May. Apache reserve and acreage figures are year-end 2009, BP Permian
reserve figures as of 30 June 2010.
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BP Canada E&P
9
Broad-based E&P business with
deep resources in early-stage
development
Material near-term growth:
Noel tight gas production ramp-up
(infrastructure complete)
Complements Apache's NEBC:
Tight gas resource plays
British Columbia
Alberta
Edmonton
Calgary
Fort St. John
Noel/Montney
Mist Mountain
Ojay
NEBC
Northwest
West
Central
East
Apache
BP
Horn River
Zama
Hawkeye
Provost
Hatton
Nevis
Kaybob
Carson
Creek
Hamburg
NGL
KITIMAT
Production figures are 1H 2010. Apache reserve
and acreage figures are year-end 2009, BP
Canada reserve figures as of 30 June 2010.
APACHE STANDALONE BP CANADA COMBINED REGION % CHANGE
Oil+NGL MB/D 16.3 6.5 22.8 40%
Natural Gas MMCF/D 326.6 239.9 566.5 73%
Total Prod. MBOE/D 70.8 46.5 117.3 66%
P1 Reserves MMBOE 531.0 223.7 754.7 42%
Net Acres 000s 4,422 1,278 5,700 29%
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Alexandria
Cairo
El Alamein
Apache
BP
APA (Compression)
APA
BP
APA
APA
BP
El Hamra Oil
Export Terminal
Matruh
BP
APA
APA
Dashour
LPG Plant
(BP)
National
Gas Grid
APA
BP Egypt (Western Desert) E&P
10
Bolt-on acquisition with ample exploitation/exploration opportunities
4 development leases in the heart of prolific Abu Gharadig Basin
Limited exploration to date, no penetrations of AEB or Jurassic, no waterfloods.
No seismic on AG since 1999
Infrastructure synergies
Production figures are 1H 2010. Apache reserve and acreage figures are year-end 2009, BP Egypt reserve figures as of 30 June 2010.
4 VEGAS discoveries since '07
Reported: 1.5 TCF, 200 MMB
BED Field (Shell):
10,000 B/D, 129 MMCF/D
Abu Gharadig
Gas Plant (BP)
APACHE STANDALONE BP W. DESERT COMBINED REGION % CHANGE
Oil+NGL MB/D 94.6 6.0 100.7 6%
Natural Gas MMCF/D 375.2 10.6 385.8 3%
Total Prod. MBOE/D 157.2 7.8 165.0 5%
P1 Reserves MMBOE 308.8 20.2 329.0 7%
Net Acres 000s 7,545 394 7,939 5%
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(CHART)
(CHART)
APA After
(Q2 '10 "APA Before"+BP Acquisition)
Combined Production
11
(CHART)
APA Before
(Q2 '10 APA+Mariner+Devon)
Q2
788 MBOE/D
50% Liquids
Q1
586 MBOE/D
51% Liquids
* Apache's reported Q2 production was 647 MBOE/D.
Q2
705* MBOE/D
53% Liquids
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$BN
Cash 1.5
Commercial Paper 0.7
364-day Bank Facility 1.0
Term Debt 1.0
Common/Mandatory Converts 2.8
Total 7.0
Preliminary Financing Plan
12
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Financial Impact
13
APACHE BP BUSINESSES ACQUIRED COMBINED
RESERVES(MMBOE) 2,589 385 2,974
1H PRODUCTION(MBOE/D) 686 83 769
1H REVENUE - 1H EXPENSES($MM) 4,738 365 - 400 5,103 - 5,138
PROVED RESERVE LIFE(YEARS) 10.3 12.7 10.6
% LIQUIDS(based on 1H production) 51% 33% 49%
Apache includes performance of Mariner and Devon acquisition assets for the same period of time.
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(CHART)
1H 2010 Production
MBOE/D
Peer Group Positioning
14
14
Peer group includes APC, CHK, DVN, ECA, EOG, HES, MRO, MUR, NBL, NFX, OXY and XTO. Apache production is 1H 2010. "APA Before"
includes APA+Mariner+Devon. "APA After" includes "APA Before" +BP Acquisition. Mariner production contribution based on January-May 2010.
Apache's reported 1H production was 617 MBOE/D.
Proved Reserves (2009YE)
BN BOE
|
Strategic exit by BP creates expansion opportunity in 3 core Apache
regions: Permian, Canada, Western Desert of Egypt
Long-lived legacy properties with 12.7 year proved reserve life
Quality assets provide drilling, optimization opportunities
Pipeline of development projects
Large resource potential in new plays
Extensive acreage and exploration portfolio
Associated midstream assets
Talented and experienced staff
Plays to Apache core competence of adding value to underworked assets
Committed to a balanced and conservative financing plan
Transaction Highlights
15
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Wilshire
BP Permian: Infill Drilling of Large Fields
18
Based on BP management estimates.
Block 31
Inventory of >2,000 infill
drilling locations in large
fields
Apache
BP
Mariner
Brown Bassett
54 drilling locations identified
87% WI; 76% NRI
Devonian tight oil/gas
development
Ellenberger CO2 flood potential
Nitrogen injection optimization
427 drilling locations identified
89% WI; 78% NRI
Ellenberger re-rentry
Devonian infill and re-fracs
Strawn up-hole recompletions
Spraberry/Wolfcamp up-hole
recomplete potential
61 drilling locations identified
38% WI; 38% NRI
Ellenberger, Strawn,
Wolfcampinfills
Downspacing in Ellenberger
Up-hole recompletion
potential for Ellenberger wells
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739 drilling locationsWell Economics:Drilling & completion cost: $1.5MMAvg. First Year Production: 40 B/DEUR: 102 MBOE (80 MBO oil, 134 MMCF gas)WI: 42%NRI: 36% IRR: 70%
BP Permian: Yeso Oil Play
19
Locations, Economics
Location Map
Development Areas
NB Tween
Barnsdall
Foster Eddy
Concho OPM
Loco Hills
Single well economics based on Apache estimates at strip oil and gas prices.
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977 drilling locations identifiedInfill drilling and recompletions across the playAdditional opportunities:Re-frac with modern frac technologyPotential to deepen to WolfcampExpansion of Wolfberry to surrounding acreageSignificant ownership of royalty interests in southern Delaware and Midland basins
Drilling & completion cost: $1.5MMAvg. First Year Production: 50 B/DEUR: 135 MBOE (80 MBO oil, 329 MMCF gas)78% WI68% NRIIRR: 99%
BP Permian: Spraberry Oil Play
20
Locations & Upsides
Location Map
Single Well Economics
Apache
BP
Mariner
Single well economics based on Apache estimates at strip oil and gas prices.
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BP Permian: Additional Opportunities
21
Infill drilling, recompletions
Waterflood enhancement
Development of new horizons/plays
Application of horizontal drilling and multi-frac technologies
Tertiary recovery
Mineral fee acreage: 1.1MM gross/405K net acres
High potential exploration prospects
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Development project ramping up to >100 MMCF/D flat for 15 years
(42 MMCF/D in June)
US$600MM infrastructure completed 2008-2010
100% WI
BP Canada: Noel Tight Gas Project
23
6
5
4
3
2
1
Compression Nodes
Cadomin Lands
Doig Lands
Cadomin & Doig Lands
Gathering Nodes
Gas Gathering
Doig Wells
Cadomin Wells
Microseismic Monitor
Based on BP management estimates.
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Significant potential on trend with core play area
Access to pipeline and processing infrastructure
Complements Apache's Canadian resource play portfolio
BP Canada: Montney Play
24
Dawson (Arc)
Parkland (Arc)
Swan (Encana) + Tupper (Murphy)
Sundown
(Murphy)
Tupper West
(MUR, ECA, COP)
TupperWest 2
ConocoPhillips/Encana
Recent ConocoPhillips Activity
West Dawson (Arc)
Groundbirch
(Shell)
W.Groundbirch
(Talisman)
N. Groundbirch
(Talisman)
E. Groundbirch
(Shell)
Sunrise
(Shell/Arc)
Based on BP management estimates.
Original Gas in Place
Noel
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2 large CBM projects in appraisal stage (100% WI)
Additional CBM opportunities in the Canada portfolio
BP Canada: CBM Potential
25
South East British Columbia CBM projectProducing CBM field 15 miles northEstimated 8.4 TCF original gas in place North East British Columbia CBM projectOpportunity within footprint of existing focus areaEstimated 1.6 TCF original gas in place
Ojay
Mist Mountain
Original gas in place based on BP management studies.
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BP Canada: Additional Opportunities
26
Kaybob, Harmattan: Dovetail with Apache positions
Mountain front: Impactive exploration potential
Large acreage portfolio well positioned for application of new horizontal
and multifrac technology plays
Potential Kitimat LNG synergies
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BP Egypt E&P Business
(Western Desert)
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28
Razzak Development License
77,000 acres
12,000 BO/D
East Badr El Din Exploration
License
20,000 acres
North Abu Gharadig
Development License
99,000 acres
500 BO/D
Abu Gharadig ("AG")
Development License
99,000 acres
5,500 BO/D
40 MMCF/D
WD-33 Development License
99,000 acres
1,500 BO/D
BP Western Desert: Concessions
Dahshour LPG Plant
1,000 BLPG/D
Concession Term:
Development concessions:
December 2024 + 5 year option
Exploration license:
Estimated 1.5 years remain
+ 2 yr extension
Fiscal terms:
Cost oil = 40%
Development cost recovery = 5 yrs
Contractor % of profit oil = 12%
Gas sales price = $2.65/MMBTU cap
Apache
BP
Cairo
Alexandria
El Alamein
National
Gas Grid
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BP Western Desert: Waterflood Opportunities
29
Cairo
Active
2010 Opportunities
Apache Waterflood Areas
Apache currently operates 27 waterflood projects in WD producing 70,000 B/D
No active waterfloods in BP Western Desert properties
Non-Apache Operated
Apache
BP
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BP Western Desert: Applying 3D Seismic
3D seismic survey underway in BP concessions (updating 1999 AG seismic)
Provides basis for regional maps in the AEB and Jurassic
Enables improved prospect definition for shallow and deep targets
1999: Repsol
Example of Seismic Improvement in Western Desert
2008: Apache
30
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BP Western Desert: Deeper Drilling Potential
31
Jurassic
AEB
Abu Roash
Bahariya
No BP wells have penetrated the prolific AEB or Jurassic formations
1,670 km2 3D seismic survey in progress covering all blocks
Cairo
4 discoveries since 2007:
Reported: 1.5 TCF, 200MMB
(Bahariya and Kharita)
Apache
BP
BED Field:
10,000B/D, 129 MMCF/D
JG Field (APA+Shell):
Discovered 2001
5,500B/D, 52 MMCF/D
East Bahariya Area Fields
(APA): 55,100B/D
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32
Apache operates compression on Northern gas export route (to Alexandria),
and Southern gas export leg to Abu Gharadig
BP operates the Southern gas export route (Abu Gharadig-Dahshour)
Access to BP infrastructure unlocks Apache shut-in production
Apache
BP
BP Western Desert: Infrastructure Synergies
APA: 0 MMCF/D
APA: 800MMCF/D
BP: 100+ MMCF/D Spare Capacity
Dashour
LPG Plant
(BP)
Shut-in Production
300 MMCF/D
Abu Gharadig
Gas Plant (BP)
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Apache's Track Record in Egypt
33
Apache Egypt Production
(CHART)
(CHART)
WELLS
Doubled Production Organically
in 5 Years to 332 MBOE/D
Western Desert Wildcat Wells 2005-2010
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In 2003, Apache acquired Forties field from BP with 144 MM BBL oil P1
By March '10: Apache had produced the full P1 acquired, and remaining
P1 reserves were 173 MM BBL
Apache's Track Record: Forties
34
(CHART)
MB/D
TREND
107% above trend
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Associated Midstream Assets
35
Apache to receive BP's interest in associated midstream assets:
Region Asset WI% Capacity Operated
Permian Block 31 plantCrane plantTerrell plant 86.5%100%23% 72 MMCF/D26 MMCF/D86 MMCF/D(note: throughput) YesYesNo
Canada 8 gas plants2,933 miles of pipelines+flow lines Various Various Primarily yes
Egypt AG gas plantAG-Dahshour pipelineAG-Al Hamra pipelineDahshour LPG plant EGPCEGPCEGPCEGPC 160 MMCF/D150 MMCF/D12" line135 MMCF/D YesYesYesYes
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