How Apache Is Scalped By Egypt’s Turmoil (APA)

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Apache Corporation (NYSE: APA) is feeling a pinch from the riots in Egypt.  The company is a very large independent oil and natural-gas producer and it has very large exposure to Egypt.  The company is now worth $41.2 billion in market capitalization, which was more before the Tunisian protests and riots spread into Egypt.

Shares were above $125.00 on early Monday, but the stock has slid each day this week: Monday’s close was $123.92, Tuesday’s close was $122.64, Wednesday’s close was $122.10, and Thursday’s close as things became more heated in Egypt was $116.33.  Shares are down another 2.5% mid-Friday at $113.35.  Volume has grown each day as well.

Egypt represents Apache’s largest acreage position with more than 11 million gross acres in 21 separate concessions with 18 producing. Apache is the largest producer of liquid hydrocarbons and natural gas in the Western Desert and the second largest in Egypt; production is operated under two joint ventures as Khalda and Qarun Petroleum Company. It also has production from non-operated properties at Northeast Abu Gharadig. Here is why Apache’s shares have reacted negatively.  The Egypt region in 2009 contributed:

  • 30% of production revenue;
  • 26% of total production with 152,600 barrels of oil equivalent per day;
  • and 13% of its total estimated proved reserves.

We already showed how the Frontier ETFs have been under pressure.  With opposition forces still at work and reportedly gaining steam, it is unknown at this point whether the markets will open for trading on Sunday or not.  Reports today are of police stations being hit with Molotov Cocktails and anti-riot officers firing rubber bullets and tear gas as rioters are attacking.

JON C. OGG