Consolidation in the sector hit a record $51 billion in the first quarter as energy companies rush to expand their oil and gas drilling inventories, especially in the top U.S. shale field, the Permian Basin.
This has also led to companies shedding assets in an effort to streamline operations and reduce debt.
Earlier this year, Occidental Petroleum (OXY.N), opens new tab said it would sell some assets to Permian Resources (PR.N), opens new tab for $818 million to cut down debt.
In August, Reuters reported that APA was exploring a sale of the drilling assets.
Proceeds from the sale will be used primarily to reduce its debt pile of $6.7 billion after the acquisition of Callon Petroleum.
The Houston-based company said that it wanted to pay down $2 billion of debt it took on as part of its acquisition within the next three years.
APA also sold some non-core assets in the Permian and Eagle Ford basins for nearly $700 million earlier this year.
"The company's more focused unconventional Permian asset base and advantageous transport and marketing positions compares favorably with like-sized, pure-play peers in the region," said John Christmann IV, the chief executive officer of APA Corp.
The deal, which is expected to close during the fourth quarter of 2024, involves properties with an estimated net production of 21,000 barrels of oil equivalent per day, of which approximately 57% is oil.
APA estimates that its fourth-quarter production would be around 307,000 boepd after the transaction closes.
Shares of the company were up 0.8% in after-market trading.
