Jana Partners LLC, an activist hedge fund, headed by Barry Rosenstein boosted its stake in Apache Corporation (NYSE:APA) to more than $1 billion, and it is demanding changes in the independent energy company.
Jana Partners’ demand to Apache
According to Wall Street Journal, Jana Partners wrote a letter urging the leadership of Apache Corporation (NYSE:APA) to sell off its international holdings to focus its drilling activities in the United States
Jana Partners also wants the independent energy company to free up its cash flow by exiting its two major projects in Australia and Canada. The activist hedge fund said it would take years and billions of dollars for Apache Corporation (NYSE:APA to complete the projects and achieve its objective to export natural gas.
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The activist hedge fund said, “Investors are unimpressed by [Apache]’s global diversification and have voted with their feet.” Jana Partners also emphasized that Apache Corporation (NYSE:APA) should consider selling itself if it does not take further steps to enhance its value.
Jana Partners noted that the performance of Apache Corporation (NYSE:APA) compared with its competitors, some of them are pure-play companies that are drilling exclusively in the shale formations such as the Permian Basin.
Apache continues to execute strategic plans
Patrick Cassidy, a spokesperson for Apache Corporation (NYSE:APA) said the company welcomes the investment of Jana Partners. He also emphasized that the company is focused on executing its strategic plan to rebalance its portfolio.
In addition, Cassidy said the company is focusing its strategy on a more predictable and profitable production growth of its North American onshore assets.
Apache Corporation (NYSE:APA) already implemented measures that are in line with the demands of Jana Partners such as selling its properties overseas including in Argentina and Egypt. The company raised $10 billion from selling properties over the past 18 months.
In May, the executives of Apache Corporation (NYSE:APA) announced that they are seeking a buyer for some of its stake in its gas export project in Canada while looking for another source of financing for investments in its liquefied natural gas plant in Australia.
Apache Corporation (NYSE:APA) is reducing its investments internationally, and it is allocating more budget for its domestic drilling activities. More than two-third of its $8.5 billion budget this year has been set aside for North America.
Over the past year, Apache Corporation (NYSE:APA) repurchased more than $2 billion worth of its own stock, and the board of directors of the company recently approved additional stock buybacks.
“The recent words and deeds of Apache’s management indicate they see an opportunity and will do what it takes to realize shareholder value. A value-unlocking opportunity this obvious and extraordinary is unlikely to persist,” according to Jana Partners.