Apache CorporationAPA

Apache is patient and deliberate. Big moves have been infrequent--Australia in 1993, Egypt in 1996, the North Sea in 2003 (and again in 2011), Gulf of Mexico deepwater in 2010--but have generally worked out well for the firm. Price discipline and a conservative balance sheet help Apache take advantage of buyers' markets.

Apache's portfolio includes a mix of oil and gas, offshore and onshore, domestic and international, and near-term and longer-dated assets, which should help mitigate project risk or potential swings in commodity prices while supporting production and reserve growth throughout our forecast period.

Although Apache's international projects require greater amounts of upfront spending, they produce at plateau levels for upward of a decade with minimal maintenance capital required.

Apache excels at acquire-and-exploit. Acquired properties in Egypt, Canada, the Gulf Shelf, and Permian regions should provide the ample opportunity for Apache to continue doing what it does best. Read more 

Deepwater drilling encompasses a unique set of challenges, including long lead times between exploration and production and managing supply-chain complexities.

Apache's recent $18 billion spending spree gives the company a lot to digest in a short amount of time. Uncertainties surrounding deep-water Gulf drilling could pose a challenge for Mariner's operations.

Political risk and burdensome regulations are a fact of life in international markets. As Apache ramps up in Egypt and Australia, issues like price controls, taxes, the vagaries of production agreements, and political unrest (as recently seen in Egypt) take on increasing importance.

Shorter lives of certain offshore reserves can necessitate acquisitions, as cost-effective replacement through drilling alone can be difficult. Read more