Chemical Management

APA Corporation to Acquire Callon Petroleum Company in All-Stock Transaction

APA Corporation to Acquire

APA Corporation and Callon Petroleum Company have entered into a definitive agreement under which APA will acquire Callon in an all-stock transaction valued at approximately $4.5 billion, inclusive of Callon’s net debt. Under the terms of the transaction, each share of Callon common stock will be exchanged for a fixed ratio of 1.0425 shares of APA common stock. The transaction is expected to be accretive to all key financial metrics and add to APA’s inventory of high quality, short-cycle opportunities. Callon’s assets provide additional scale to APA’s operations across the Permian Basin, most notably in the Delaware Basin, where Callon has nearly 120,000 acres. On a pro forma basis, total company production exceeds 500,000 BOE per day and enterprise value increases to more than $21 billion.

Key Highlights

  • Combination of Callon’s Delaware-focused footprint with APA’s Midland-focused footprint provides scale and balance in the Permian Basin;
  • APA’s oil-prone acreage in the Midland and Delaware Basin combined will increase by more than 50% following the transaction;
  • Expected to be accretive on key financial and value metrics;
  • Estimated overhead, operational and cost-of-capital synergies to exceed $150 million annually; and
  • Additional scale anticipated to improve credit profile; pro forma balance sheet will remain strong with leverage at 1.1x net debt / adjusted EBITDAX.

Management Commentary

“This transaction is aligned with APA’s overall portfolio strategy and fits all the criteria of our disciplined approach to evaluating external growth opportunities. Callon has built a strong portfolio in the Permian Basin that is complementary to our existing Permian assets and rounds out our opportunity set in the Delaware,” said John J. Christmann IV, APA’s CEO and president. “The acquisition is accretive and unlocks value for both shareholder bases, as increased scale will enable us to realize significant overhead and cost-of-capital synergies. The pro forma footprint in the Permian will also create opportunities to capture meaningful operating synergies.”

“We are very proud of the significant steps we have taken to enhance Callon’s asset base, operational performance and balance sheet over the past several years,” said Joe Gatto, Callon’s president and CEO. “This combination with APA now provides for an enhanced value proposition for our shareholders built on their depth of experience and strong execution in the Permian Basin, flexibility for increased capital allocation, and ongoing delineation and optimization efforts. Importantly, I would like to personally thank each and every Callon employee for their role in building this company. I am very proud of this team and what we have achieved together.”

Combined Permian Asset Position and Preliminary 2024 Planned Activity

Pro forma average daily Permian Basin production was 311 Mboe/d in 3Q 2023, which represents a 48% increase from APA’s Permian Basin production on a standalone basis. APA's oil production as a percentage of BOE’s in the Permian increases from approximately 37% to 43% in 3Q 2023, on a pro forma basis.

APA will provide additional activity plans and details post closing.

Pro Forma APA Positioning

“APA has a proven ability to deliver strong results from its unconventional assets in the Permian Basin, and we look forward to building on the progress that the team at Callon has made within its asset base. This transaction is aligned with our strategy of maintaining and growing a diversified portfolio, underpinned by large-scale core areas of operation while continuing to build a portfolio of medium and longer-term exploration-driven development opportunities,” Christmann said.

Following the closing, the company’s worldwide pro forma production mix will be approximately 64% U.S. / 36% international.

APA’s global portfolio includes ongoing development on large-scale legacy assets in the U.S. and Egypt. The company is also advancing a FEED process for a large-scale FPSO development offshore Suriname. In addition to current production and development activities across the globe, APA maintains a differentiated exploration portfolio, which includes newly acquired large-scale blocks offshore Uruguay and onshore state-land leases in Alaska.

About APA

APA Corporation owns consolidated subsidiaries that explore for and produce oil and natural gas in the United States, Egypt and the United Kingdom and that explore for oil and natural gas offshore Suriname. APA posts announcements, operational updates, investor information and press releases on its website, www.apacorp.com. Additional details regarding Suriname, ESG performance and other investor-related topics are posted at investor.

About Callon Petroleum

Callon Petroleum Company is an independent oil and natural gas company focused on the acquisition, exploration and sustainable development of high-quality assets in the Permian Basin in West Texas.

Pro forma enterprise value is derived from the addition of each company’s market capitalization based on closing stock prices on 1/3/24, plus the net debt of each company as of 9/30/23.

Spotlight

Spotlight

Related News

Chemical Management

Infinium and Amogy Team Up to Spearhead Green Ammonia and eFuels Solutions

Infinium | January 25, 2024

Leading eFuels provider Infinium and Amogy Inc. ("Amogy"), a pioneer of carbon-free, energy-dense power solutions, have entered into a memorandum of understanding (MOU) to explore opportunities to integrate their technologies and develop commercial applications across the eFuels and green ammonia value chain. Infinium and Amogy are also exploring collaborations with both Mitsubishi Heavy Industries (MHI) Group and SK Innovation for deployment of the integrated solution. To accelerate the decarbonization of heavy industry sectors, the companies will jointly study and identify the most suitable applications to deploy their eFuels and green ammonia solutions. A key focus of this collaboration is the potential integration of Amogy's ammonia-cracking technology to provide low-cost, accessible green hydrogen feedstock as an input to produce Infinium's eFuels. Infinium eFuels, also known as electrofuels or Power-to-X, are made from green hydrogen and waste carbon dioxide (CO2) in a proprietary process. Amogy's ammonia-cracking technology leverages its state-of-the-art catalyst materials to crack ammonia into hydrogen and nitrogen at lower reaction temperatures with high durability, reducing heating and maintenance requirements. Upon identifying promising applications, Infinium and Amogy will initiate strategic pilot programs, showcasing tangible and scalable implementations of their clean technology solutions. The partnership also entails the evaluation of additional opportunities for collaboration within the eFuels and ammonia spaces, with a focus on the development of commercial use cases. "Ingenuity and collaboration are critical to creating decarbonization solutions today. Our partnership with Amogy will go a long way toward helping advance our ability to rapidly scale the production of ultra-low carbon Infinium eFuels, including eSAF, eDiesel and eNaphtha," said Robert Schuetzle, CEO at Infinium. "We are thrilled to forge this alliance with Infinium. By uniting our expertise and resources, we aim to unlock innovative opportunities that will pave the way for sustainable solutions," says Seonghoon Woo, CEO of Amogy. "This partnership reflects a shared commitment to accelerating technologies that can contribute to the reduction of carbon emissions in the heavy industry sectors." Mitsubishi Heavy Industries (MHI) has invested in both Infinium and Amogy and is exploring potential collaboration for new solutions and applications in energy sector project development. "Decarbonizing heavy industries requires numerous approaches that can concurrently and collaboratively help mitigate greenhouse gas emissions," said Ricky Sakai, Senior Vice President of New Business Development at MHI of America. "We are excited to see how Amogy's emission-free, energy-dense ammonia solution and Infinium's proprietary eFuels production process might be aligned to overcome challenges and accelerate the global availability of commercial decarbonization solutions." SK Trading International (SKTI) invests in solutions that contribute to addressing climate change and environmental pollution and is an investor in Infinium while its parent company SK Innovation has invested in Amogy. "Our global goals to slow the warming of the planet require significant efforts so they can quickly scale, find synergies, and explore new pathways," said Hyunchol Park, Managing Director and Head of Global Trading at SKTI. "Infinium and Amogy are leaders in their progress and proven solutions, and I believe their partnership will result in the identification of breakthrough opportunities to expand and grow access to cleaner fuels." About Infinium Infinium is an electrofuels provider on a mission to decarbonize the world. Electrofuels are a new class of synthetic fuels made using renewable power and waste carbon dioxide, not petroleum or resources needed to produce food. Infinium electrofuels can be dropped into existing trucks, planes and ships, significantly reducing harmful carbon dioxide emissions compared to fossil-based fuels. In addition to helping the transport industry meet carbon reduction goals, Infinium electrofuels are a lower carbon alternative for chemical processing, including plastics production. About Amogy Founded in 2020, Amogy is on a mission to unlock the potential of ammonia as a clean energy source, accelerating the global journey to Net Zero and sustaining future generations. With a presence in Brooklyn, Houston, Norway, and Singapore, Amogy is developing fully integrated ammonia-to-power systems to enable the decarbonization of the hard-to-abate sectors, such as shipping, power generation, and heavy-duty transportation.

Read More

Chemical Management

LyondellBasell Launches Petrothene T3XL7420: A Revolutionary Polymer Compound for Optimized Manufacturing

LyondellBasell | January 24, 2024

LyondellBasell (LYB), a global leader in the chemical industry, is proud to announce the release of a cross-linkable, all-in-one flame-retardant compound, Petrothene T3XL7420, which is expected to deliver considerable cost savings while streamlining manufacturing processes. This new product offering also improves the quality of end products for wire producers in the automotive and appliance industries. Based on customer demand and industry need, LyondellBasell designed this innovative compound to address the need to optimize production line speeds and enhance manufacturing efficiency. Petrothene T3XL7420, is specifically formulated for use in Society of Automotive Engineers (SAE) primary wire applications, International Organization for Standardization (ISO) thin wall applications, and Underwriters Laboratories (UL) and Canadian Standards Association (CSA) appliance wire. Petrothene T3XL7420 offers several benefits that make it an attractive option for wire producers, including enhanced cure kinetics, increased stiffness for easier small gauge wire assembly and better barrier performance compared to other Petrothene XL. "Developing innovative solutions to address the ever-evolving needs of our customers is an important aspect of how we operate and continue to grow our market share," said Palmer Giddings, vice president Polyolefins at LyondellBasell. "Providing cost effective and efficient solutions that are UL and CSA certified, gives us a market advantage for this one-of-a-kind solution." Petrothene T3XL7420 has undergone rigorous testing and certification processes to ensure its quality and reliability. With this latest development, LyondellBasell reinforces its position as a leading provider of innovative solutions for the wire and cable industry and expects this compound to become the product of choice for a wide range of automotive and appliance wiring applications. About LyondellBasell We are LyondellBasell – a leader in the global chemical industry creating solutions for everyday sustainable living. Through advanced technology and focused investments, we are enabling a circular and low carbon economy. Across all we do, we aim to unlock value for our customers, investors and society. As one of the world's largest producers of polymers and a leader in polyolefin technologies, we develop, manufacture and market high-quality and innovative products for applications ranging from sustainable transportation and food safety to clean water and quality healthcare.

Read More

Chemical Technology

Chemify Partners with Prepaire Labs to Apply Ground-breaking Chemistry AI-Robotics to Radically Accelerate the Discovery of Non-Addictive Opioids

Chemify | January 23, 2024

Chemify and Prepaire™ Labs announced to expand their partnership with an additional program to tackle the ongoing Opioid crisis and develop a novel class of digitally discovered non-addictive Opioids as pain modulators, as well as drugs tackling Opioid addiction directly by combining Chemify's breakthrough programmable chemistry platform with Prepaire’s integrated novel open collaboration drug discovery platform. The project, named Toxifree, comes in response to the FDA’s Center for Drug Evaluation and Research (CDER) requesting drugmakers and researchers to develop treatments for stimulant use disorder, hoping to address a major gap in the addiction crisis response. After a successful initial partnership, Chemify and Prepaire are now aiming to leverage Chemify's Chemputation technology which enables the automated and integrated design, discovery, and synthesis of complex molecules on demand using a chemical programming language and Prepaire's advanced open-architecture drug development platform. Under the terms of this partnership, Chemify will design and discover novel compounds to identify Opioid-derived hits and develop them further into candidates. Chemify will receive at least USD $30 million in payments and pre-negotiated, success-driven clinical and regulatory milestones for each developed molecule, as well as single digit royalties on any resulting products. Lee Cronin, Chemify's Founder and CEO and Regius Professor of Chemistry at the University of Glasgow has extensive experience leading research efforts to develop solutions for the opioid crisis. Cronin lead a team that won several NIH-prize challenges including winning the grand runner up prize for the design, discovery and automated synthesis of next generation, safer and non-addictive drug-candidates to help address the opioid crisis. "We are extremely excited to combine Chemify's technology for molecular design, discovery and synthesis with the integrated Prepaire platform to expand our collaboration and create a fully integrated, digitally driven drug discovery approach. With this partnership we are breaking ground on a new pain modulation discovery program that aims to tackle the global need for better and non-addictive pain medication. With our unique design approach guided by Chemputation, we are utilizing an evolutionary approach to discovering novel compounds to solve this devastating and critical healthcare need," said Professor Lee Cronin, Chemify's Founder and CEO. "Our partnership with Chemify allows our discovery platform to integrate directly with Chemify's chemical space exploration approach, enabling us to access novel chemical matter that would have otherwise been inaccessible. As we progress our collaboration, we are aiming to build an integrated approach that can be used for many more indications beyond novel pain modulators. There aren't any approved treatments to help address addiction to opioids, whose use has surged in recent years. The purpose of this FDA guidance is to assist in the clinical trial designs for the development of novel drugs to support indications for treatment of moderate to severe cocaine use disorder, treatment of moderate to severe methamphetamine use disorder, or treatment of moderate to severe prescription stimulant use disorder," said Dr Vicent Ribas, Prepaire’s Co-Founder. About Chemputation Digital chemistry applies principles of computation to chemistry for programable chemistry and Chemify has developed the underpinning infrastructure to make this possible for chemical discovery and synthesis. Like a computer program, digital chemistry programs can automatically run chemical experiments, make new molecules, and ensure that complex chemical recipes are always accessible and perfectly reproducible. Chemical programs are precise pieces of code that allow fully transparent and reliable operation allowing the implementation of AI and other techniques with full audit and safety. About Chemify Based in Glasgow, Chemify is a pioneering company digitizing chemistry to provide world-leading pharmaceutical, biotechnology, and industrial partners access to an exponentially growing space of novel molecules and materials. By leveraging decades of chemistry experience, hardware robotics, and artificial intelligence, Chemify's Chemputation technology enables companies to access an end-to-end workflow for drug discovery, molecule synthesis, and materials discovery. Chemify was founded by CEO Lee Cronin based on conceptual advancements from Cronin's Digital Chemistry Laboratory at the University of Glasgow in Scotland. By building the infrastructure to digitize chemistry, Chemify is reimagining chemical research, discovery and manufacturing to benefit all of humanity by accelerating advances across chemistry with a focus on medicine and functional materials. About Prepaire Labs Prepaire Labs is a pioneering healthcare technology company focused on revolutionizing drug discovery and precision medicine. Through the integration of deep learning and biology, Prepaire Labs builds predictive models grounded in genetic, phenotypic, and clinical data. These models form a view to the underlying architecture and biology of diseases. Prepaire Labs utilizes patient-derived induced pluripotent stem cells (iPSCs), genome editing, high-content cellular phenotyping, and machine learning to create in vitro disease models that optimize genetics, cell-type, environment, and multidimensional data collection for increased predictability of human clinical outcomes. A state-of-the-art BSL3 lab is opening in May 2024, located at Masdar City, Abu Dhabi, UAE.

Read More