Apache Corporation Essay

Apache Corporation was formed in 1954, based on the idea of becoming significant and prosperous in the oil industry. The company took $250,000 of investor capital, paired it with fierce determination and now Apache Corporation is considered one of the top independent oil and gas exploration and production companies in the world (â€Å"Apachecorp.com†, 2012). Apache Corporation operates in both domestic and international markets exploring for, developing, and producing natural gas, crude oil, and natural gas liquids (â€Å"Apachecorp.com†, 2012). On December 31, 2011, the Company had production in the United States, Canada, Egypt, and Australia. Offshore production exists in the United Kingdom, the North Sea, and Argentina. Looking into the future Apache plans to continue to explore other countries for new discoveries and development opportunities (â€Å"Apachecorp.com†, 2012). Environment The success of any business depends on the ability to adapt to the environment it operates in. As part of the oil and gas industry Apache Corporation operates in a global business environment known for its competitiveness. The company has shown growth in production thirty one of the last thirty three years and throughout those years change has been a constant companion. Wide swings in oil prices have become commonplace in the world today, the price of a barrel of oil changes almost daily. Operating in other countries means that political unrest and changes in government policies must be addressed, as well as oil industry regulations that are constantly evolving. Apache Corporation has withstood the changes in business environment for 57 years and remains committed to successfully embracing the changes yet to come. Technology Over the last 10 years the most significant technological advance for the industry has been the coupling of horizontal drilling with hydraulic fracturing techniques. This new method allows the development of resources that are trapped in shale and other areas that have been nearly impossible to mine in the past. Apache Corporation now applies this technology worldwide (â€Å"Apachecorp.com†, 2012). This method is also used by nearly all other companies in the industry including the comparison companies Devon and Anadarko. Financial Health According to the 2011 Apache Corporation Annual Report the company showed a profit for the year and the debt ratio is 0.22. One top competitor Anadarko Petroleum located in San Antonio Texas has a debt ratio of .65 and showed a loss for the 2011 year (â€Å"Hoovers†, 2012). A second top competitor Devon Energy located in Oklahoma City, Oklahoma had a better year in 2011, this company did show a profit and their debt ratio is 0.48 (â€Å"Hoovers†, 2012). Within the gas and oil industry the overall financial status of Apache Corporation is sound. Working in a high risk industry the production risks are balanced by both geographic diversification and a mix of high and low risk properties in the portfolio (â€Å"Hoovers†, 2012). With approximately 3 billion barrels of oil equivalent in reserve Apache Corporation is positioned to maintain their current momentum. The natural gas product is sold most often at current market prices while the crude oil is marketed directly to integrated marketers and refineries. Contract terms are generally 30 days with automatic renewal until canceler at current market prices which change almost daily (â€Å"Apachecorp.com†, 2012). Apache Corporation has been exploring for and producing oil and gas products for over 50 years. The company has been successful and appears to be a sound investment. In this analysis we have reviewed the business environment, financial health and use of technology for Apache Corporation for the purpose of deciding whether or not to invest in the company. References http://www.apachecorp.com/Resources/Upload/file/investors/Apache_AR_2011.pdf Hoovers. (2012). Retrieved from http://www.hoovers.com/company/Apache_Corporation/rfrtif-1-1njea3.html Hoovers. (2012). Retrieved from http://www.hoovers.com/company/Devon_Energy_Corporation/rrxkxi-1-1njea5.html