Anadarko Petroleum approached Apache Corp. about a combination that would be the largest for an independent U.S. oil and gas producer this year, according to people familiar with the matter.
Such a deal would create an explorer that pumps more crude than OPEC member Ecuador.
Apache rejected an initial proposal from its rival and is working with Goldman Sachs to advise on its options, according to the sources.
It’s unclear whether talks will resume, other bidders might emerge or Anadarko will walk away, the sources said.
In pursuing Apache, Anadarko would acquire a portfolio of fields that contain a higher proportion of crude than its own.
Apache is one of the biggest leaseholders in the Permian Basin in western Texas, the largest U.S. shale play and the only one where oil output has continued to grow even as drillers slash spending and idle rigs.
“It’s not a good combination in my view, and the market agrees,” said Fadel Gheit, an analyst at Oppenheimer & Co. in New York. “It could be a defensive move by Anadarko to ward off a potential takeover bid. Anadarko has been viewed as a potential target for years.”
In October, Texas-based Anadarko, the largest producer in Colorado, reported a $2.2 billion loss for the third quarter and said it had cut its spending in the Wattenberg Field north of Denver by half since the start of the year. Bloomberg News
