UPDATE 2-Apache to buy Mariner for $2.7 bln

* Says deal values Mariner at $26.22 a share

* To expand Apache into deepwater Gulf of Mexico

* Mariner shares soar, Apache shares down slightly
(Recasts, adds details, background, share activity, NEW YORK
dateline, byline)

By Matt Daily

NEW YORK, April 15 (BestGrowthStock) – Apache Corp (APA.N: ) said it
will acquire oil and natural gas explorer Mariner Energy Inc
(ME.N: ) for $2.7 billion in its second major acquisition of
offshore Gulf of Mexico properties this week.

Energy companies have been snapping up assets and companies
with lucrative properties in recent months on expectations that
oil and gas demand will rise as the global economy rebounds and
prices for fuels will climb.

Apache, one of the largest U.S. independent oil and gas
producers, will pay $26.22 per share in cash and stock for each
Mariner share, a 45 percent premium over Wednesday’s close, in
the deal that Chief Executive Steve Farris told CNBC would give
it “a new avenue for growth in an oil basin.”

Energy producers have begun shifting their focus back to
oil assets in recent months from natural gas as prices for
crude have steadily climbed while gas prices have weakened.

The acquisition will add Mariner’s 63,000 barrels of oil
equivalent production per day from the deepwater and
continental shelf of the Gulf and the Permian basin in West
Texas to Apache, which produced 583,000 BOE per day last year.

Based on the current output, the deal appears expensive,
according to Phil Weiss, analyst with Argus Research, but
including the proven reserves, the purchase price came out to
about $15 per BOE.

“That seems like a reasonable number,” he said.

On Monday, Apache said it planned to buy Devon Energy
Corp’s (DVN.N: ) shallow-water oil and gas assets on the U.S.
Gulf of Mexico Shelf for $1.05 billion.

That deal follows China’s Sinopec Group’s announcement
earlier this week that it will pay $4.65 billion for
ConocoPhillips’ (COP.N: ) stake in a Canadian oil sands project
and India’s Reliance Industries (RELI.BO: ) $1.7 billion
investment into a joint venture in the Marcellus Shale wth
Atlas Energy last week.

Weiss said the recent consolidation in the energy sector
appeared to still be in its early phase, when studies show the
best deals tend to be signed.

“The longer it continues the greater that chance that
buyers will be on the wrong side of things,” he said. “Prices
go up and returns go down.”

Under the new Apache deal, Mariner shareholders would
receive 0.17 of an Apache share and $7.80 for each Mariner
share.

Apache will also assume $1.2 billion in Mariner’s debt as
part of the deal, and that the transaction could be completed
by the third quarter.

Mariner Energy is one of the few mid-cap oil and gas
companies focused on the Gulf of Mexico, with about 350
offshore blocks, including around 100 in deepwater, totaling
around 880,000 net acres at end 2009.

It also owns 150,000 acres in the Permian basin and 54,000
net acres in the DJ basin that it recently acquired. It also
owns 43,000 acres in “unconventional” fields, such as shale.

Shares of Apache fell 3.5 percent in premarket trade to
$104.30, while Mariner shares jumped nearly 40 percent to
$25.19.

Stock Market Analysis

(Additional reporting by Arup Roychoudhury in Bangalore;
Editing by Jarshad Kakkrakandy, Dave Zimmerman)

UPDATE 2-Apache to buy Mariner for $2.7 bln