Energy company APA has entered into an agreement to acquire oil exploration and production company Callon Petroleum in a stock exchange transaction valued at approximately US$4.5 billion, including debt. This acquisition marks a continuing trend of consolidation in the US energy industry.

The deal comes nearly three years after Callon, formerly known as Apache Corp, wrote off its Alpine High discovery in the U.S. Permian region and subsequently redirected its spending to oil exploration in South America and North Africa. The transaction will be conducted through a share swap and, upon closing, APA shareholders will own approximately 81% of the combined entity, while Callon shareholders will own approximately 19%.

The transaction is expected to increase APA's total production to more than 500,000 barrels of oil equivalent per day, along with expected synergies of more than $150 million per year.

This acquisition fits into a wider trend of significant consolidation in the energy sector. Last year we saw Exxon Mobil's acquisition of Pioneer Natural Resources for nearly USD 60 billion, Chevron's USD 53 billion takeover of Hess and Occidental Petroleum's USD 10.8 billion deal to acquire CrownRock.