APA to buy Callon Petroleum in $4.5bn deal

US energy company APA Corp has agreed to buy smaller rival Callon Petroleum in a $4.5bn all-share deal which includes Callon’s debt.

Under the terms of the transaction, announced on Thursday, each share of Callon common stock will be exchanged for a fixed ratio of 1.0425 shares of APA common stock.

APA said the deal is expected to be accretive to all key financial metrics and add to its inventory of "high quality, short-cycle opportunities". It also said that Callon's assets provide additional scale to its operations across the Permian Basin, most notably in the Delaware Basin, where it has nearly 120,000 acres.

The company’s chief executive and president, John J. Christmann IV, said: "This transaction is aligned with APA's overall portfolio strategy and fits all the criteria of our disciplined approach to evaluating external growth opportunities. Callon has built a strong portfolio in the Permian Basin that is complementary to our existing Permian assets and rounds out our opportunity set in the Delaware.

"The acquisition is accretive and unlocks value for both shareholder bases, as increased scale will enable us to realize significant overhead and cost-of-capital synergies. The pro forma footprint in the Permian will also create opportunities to capture meaningful operating synergies."