Apache to Acquire Mariner in $2.7 Billion Deal

Oil and gas company Apache (APA) is doing its own exploration, snapping up rival Mariner Energy (ME) in a deal valued at $$2.7 billion, Apache announced Thursday.

The merger will give Apache an entry into deep water exploration in the Gulf of Mexico, where it has considered venturing for years. And it comes on the heels of another Gulf of Mexico acquisition announced earlier this week, when it acquired the shallow water oil assets of Devon Energy (DVN) for $1.05 billion.

Mariner investors will receive a 0.17043 share of Apache and $7.80 in cash for every Mariner share they hold, valuing the deal at $26.22 per share, prior the the merger announcement. Mariner closed at $17.65 on Wednesday, putting the deal's premium at a lofty 48.6%. The deal also calls for the assumption of $1.2 billion in debt.

"This is a strategic step and a natural extension into the deepwater Gulf for Apache," said Steven Farris, Apache's CEO, in a statement. "Mariner provides an exciting new platform for growth in the deepwater and complements our strengths in the Gulf Shelf and the Permian Basin. Based on our experience working with the Mariner team, we also believe the two companies will make an excellent cultural fit."

Mariner, headquartered in Houston, Texas, operates in the Permian Basin, Gulf Coast and Gulf of Mexico. Apache conducts oil and gas exploration in the U.S., Canada, Egypt, United Kingdom North Sea, Australia and Argentina.

The deal is expected to close in the third quarter, pending shareholder and regulatory approval.

Shares of Mariner were up 38.3% to $25.02, while Apache slid 4% to $103.75.