(Adds details shelf and other asset sales, Apache shares)
By Greg Roumeliotis and Michael Erman
NEW YORK, May 28 (Reuters) - Apache Corp isexploring a sale of a stake in its shallow water Gulf of Mexicoassets, attracting private equity interest as it looks to reacha $4 billion asset sale target, several people familiar with thematter said.
Apache has hired Goldman Sachs Group Inc to sell aminority stake in its oil and gas assets located on theshallower continental shelf region of the Gulf, the people said.These assets currently produce more oil and gas and are easierand less risky to exploit than their deepwater counterparts.
Apache would retain control and continue to develop andoperate the shelf assets, they added, underscoring itsreluctance to give up its status as the largest oil and gasproducer in the Gulf of Mexico shelf.
Apache shares ended up 0.9 percent at $82.39 on Tuesday.
The Houston-based company has also hired Jefferies Group Incto sell all of its deepwater assets in the Gulf of Mexico, whichcould potentially be more lucrative, but are also more costlyand risky to develop, the people added.
The shelf assets appeal primarily to financial investors,the people said. TPG Capital LP, Apollo Global Management LLC and KKR & Co LP are among the private equityfirms mulling offers for them, they added.
The deepwater assets appeal to other oil companies as wellas private equity, the people said.
TPG is working with the former Mariner Energy team, led byScott Josey, that sold the deepwater assets to Apache in 2010 ina $3.9 billion deal, one of the people said.
TPG is interested in acquiring both the deepwater and shelfassets provided Apache gives up control of the latter, theperson added.
Some of the people spoke on Tuesday and others spoke lastweek. They asked not to be identified because details of theprocesses are confidential.
An Apache spokesman declined to comment on the salesprocesses, but noted the company has announced an asset saleprogram. Goldman Sachs also declined to comment. Jefferies,Apollo, TPG and KKR did not immediately respond to requests forcomment.
Apache has developed a robust list of potential assets salesand believes it can generate about $4 billion of proceeds in2013 from the initial phase of its divestiture program, ChiefExecutive Steve Farris told analysts on May 9, without referringspecifically to the Gulf of Mexico assets or their value.
The company would use the money first to pay down $2 billionof debt and then buy back shares, he added.
According to the company's website, Apache has been thelargest owner of acreage held by production on the Gulf ofMexico's continental shelf since 2004, with about three milliongross acres.
Apache spent more than $16 billion acquiring oil and gasproperties over the last three years. But the company now isselling assets off, including some that acquired over thatperiod, as it has struggled to grow its production, causing itsshares to fall.
The company agreed to buy its deepwater position fromMariner just three years ago, five days before BP Plc's well blowout in the Gulf of Mexico resulted in the worst oilspill in U.S. history.
Because of the increasing regulation since the spill,drilling in the deepwater Gulf of Mexico has become a costlierand lengthier process for oil and gas companies - a dauntingprospect for a company such as Apache that is looking to shoreup its balance sheet.
Investors showed their displeasure with Apache's recentstrategy and performance at the company's annual meeting where,in a non-binding vote, they rejected a pay raise for Farris.
Apache's deepwater production in the Gulf of Mexico in thefirst-quarter of 2013 was 13,311 barrels of oil equivalent perday (boe), a 26 percent decline from the fourth quarter of 2012,Apache said earlier this month. Its production from the shelfwas 92,024 boe per day, a 4 percent decline from the fourthquarter of 2012. (Reporting by Greg Roumeliotis and Michael Erman in New York.Editing by Andre Grenon)
BP (BP.)
