Canaccord: Apache Corp Won't See M&A, Assets Don't Warrant Premium

Shares of

are down 19 percent year-to-date, despite having risen above the $70 mark in mid-April. Canaccord Genuity's Sam Burwell believes that Apache's asset base warrants no premium and that the company is unlikely to be taken over. Apache recently rejected a "modest premium" all-stock purchase offer from

. "We agree that APA's asset base warrants no premium," analyst Sam Burwell stated. Anadarko's offer was based on the belief that Apache was close to fairly priced at the prevailing $25 billion enterprise value. The rejection by Apache suggests that the bid-ask spreads remain wide for corporate merger and acquisitions, Burwell mentioned. While Apache does have one of the largest leaseholds in the Permian basin, not much of it is in good areas. The company's remaining asset base in Mid-Continent, non-core Eagle Ford, Canada, Egypt and North Sea is also not very significant, the analyst pointed out. "A cheap valuation (~6.0x consensus 2016 EV/EBITDA, prior to deal news) was essentially APA's best attribute as an acquisition would likely have been immediately accretive for APC. We do not believe that APA will ultimately be a target for any of the majors either," Burwell wrote.