APA Apache Corporation

By Tess Stynes 

The chief executive of Anadarko Petroleum Corp. said the oil-and-gas company recently made a preliminary offer for rival Apache Corp. but has since withdrawn it.

The Houston oil-and-gas exploration and production company didn't disclose the size of its bid but said it reflected a modest premium and consisted of all stock. Apache had a market value of about $20 billion as of Tuesday's close.

Anadarko CEO Al Walker said in prepared remarks that efforts to reach a mutually acceptable confidentiality agreement with Apache to explore a possible deal were rejected, and no substantial talks took place.

An Apache spokesman wasn't immediately available to comment.

Apache shares dropped 6.5% to $49.85 in recent premarket trading and had climbed 12% this week on deal speculation. Anadarko shares rose 2.2% to $64.80.

Mr. Walker said the company was unwilling to pursue the transaction without access to detailed non-public information and said its analysis suggests Apache appears to trade at or near full value.

RBC analysts, however, said earlier this week that Apache shares are still relatively undervalued, despite rising more than 40% from September's lows and speculated the company likely won't agree to a buyout unless the bid is far above current share prices. The investment bank also doesn't think the oil company's management is in any hurry to sell.

"Apache has one of the stronger balance sheets in the E&P sector with $1.8B of working capital and an undrawn $3.5B revolver...APA has the ability to wait out the current weakness in commodities. There is no need for them to pursue a sale of the company at this time," the analysts said.

Apache last week raised its production guidance and reported a loss that wasn't as deep as analysts had expected for the September quarter. However, the bottom line was hurt by billions of dollars in write-downs driven by low commodities prices.

Like many other U.S. energy companies hurt by tanking commodities prices, Apache has cut back on drilling rigs and has been delaying well completions.

For its part, Anadarko last month reported that it swung to a $2.24 billion loss in its third quarter amid hefty write-downs and a drop in revenue.

The company has been hurt by the tumble in crude prices over the past 15 months.

Write to Tess Stynes at tess.stynes@wsj.com

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(END) Dow Jones Newswires

November 11, 2015 09:30 ET (14:30 GMT)

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