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The following is a press release from Moody's Investors Service: Nearly $5 billion of rated debt affected New York, July 21, 2010 -- Moody's Investors Service placed Apache Corporation's ratings under review for downgrade following its announced $7 billion all cash asset acquisition from BP PLC, including its A3 senior unsecured ratings. Its P-2 commercial paper rating is not under review. While substantial existing cash and equity will fund the BP transaction, that leverage is amplified by the fairly low proportion of production and producing reserves relative to the price paid for the BP assets, the corresponding substantial proportion of undrilled yet-to-be-funded proven undeveloped reserves and probable and possible acreage, the pending $3.9 billion acquisition of Mariner Energy and the June closing of its $1.050 billion acquisition of Devon Energy properties. Although leveraging, the BP acquisition adds important businesses that intensify three of Apache's existing core operating areas -- the Permian Basin of eastern New Mexico and West Texas, Western Canadian Sedimentary Basin, and the geologically complex Western Desert of Egypt. Apache will receive all of BP's properties in the Permian Basin and Egypt and most of its properties in Canada. Apache also generated strong operating and financial results in second quarter 2010. If Apache were to be downgraded, it would be no more than one notch. The review will assess expected leverage on pro-forma production, on proven developed (PD) reserves and, after adding all future years' FAS 69 capital spending to debt, on total proven reserves. The pro-forma profile includes the Devon properties, Mariner Energy acquisition ($2.3 billion debt funded) and the BP transaction. The review will assess whether the leverage on production and reserves can reasonably be expected to be restored to levels compatible with an A3 rating in an acceptable timeframe, through rising production and PD reserves from the drill bit. Apache will fund the acquisition with approximately $1.5 billion in balance sheet cash, new common and mandatorily convertible preferred stock in the range of $2.8 billion, and approximately $2.7 billion in debt. The debt portion would include approximately $700 million in commercial paper, $1 billion borrowed under a 364 day bank facility and $1 billion of term debt. Apache already announced an offering of 21 million common shares (approximately $1.85 billion) and $1.1 billion of mandatorily convertible preferred stock. Apache estimates 385 million Boe of proven reserves (37% Permian, 58% Canada, 5% Egypt) and 82,800 boe/day of production (34.5% Permian, 56% Canada, 9.5% Egypt). Apache valued the Permian properties at $3.1 billion, Canada at $3.25 billion and Egypt at $650 million. The Permian package includes properties in the Yeso, Wolfcamp and Spraberry primary, secondary and tertiary production oil plays. Apache believes the Permian properties in particular were largely under exploited after BP acquired Arco Oil and Gas in 1999. In Egypt, in addition to oil and gas reserves and acreage, BP's mid-stream lines will enable approximately 300 mmcfe per day of shut-in Apache production to get to market. The last rating action on Apache was April 15, 2010 when we affirmed Apache's A3 senior unsecured ratings, P-2 commercial paper rating, and stable rating outlook upon the announcement of its Mariner Energy acquisition. The principal methodology used in rating Apache was the Independent Exploration and Production (E&P) Industry rating methodology published in December 2009 which can be found at www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website. Apache Corporation is headquartered in Houston, Texas. Copyright 2010 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved. CREDIT RATINGS ARE MOODY'S INVESTORS SERVICE, INC.'S ("MIS") CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MIS DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. 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It would be dangerous for retail investors to make any investment decision based on this credit rating. If in doubt you should contact your financial or other professional adviser. (END) Dow Jones Newswires July 21, 2010 11:11 ET (15:11 GMT)