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APA Acquires Callon Petroleum in $4.5 Billion Permian Deal

APA Corporation will buy Permian oil and gas producer Callon Petroleum Company in an all-stock transaction valued at around $4.5 billion, including Callon’s net debt, as the merger and acquisition activity in the U.S. shale patch continues. 

Callon’s assets will provide additional scale to APA’s operations across the Permian Basin, most notably in the Delaware Basin, where Callon has nearly 120,000 acres, the companies said in a joint statement on Thursday.

On a pro forma basis, total company production would exceed 500,000 barrels of oil equivalent (boe) per day and enterprise value would increase to more than $21 billion. 

The transaction has been unanimously approved by the Boards of Directors of both APA and Callon and is expected to close during the second quarter of 2024, subject to customary closing conditions, termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and approval of the transaction by shareholders of both APA and Callon.  

APA’s executive management team will lead the combined company with the headquarters remaining in Houston, Texas. 

The acquisition is the latest in a series of deals in the U.S. oil industry in recent months. 

In October, Exxon announced a deal to buy Pioneer Natural Resources in an all-stock transaction valued at $59.5 billion. The implied total enterprise value of the transaction, including net debt, is approximately $64.5 billion.

Weeks later, Chevron said it would buy Hess Corporation in an all-stock transaction valued at $53 billion with a total enterprise value, including debt, at $60 billion.  

In December, Occidental Petroleum announced the acquisition of Permian oil and gas producer CrownRock for cash and stock in a deal valued at around $12 billion, including debt.

Industry executives and analysts expect the consolidation drive in the oil and gas sector to continue amid high stock values and the desire of many firms to get their hands on more inventory for production in the top shale basin, the Permian.  

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By Tsvetana Paraskova for Oilprice.com

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