For months now, the favored parlor game has been speculating on when the M&A logjam will break and which companies would be the most likely targets. But when Anadarko Petroleum Corp. (NYSE: APC) revealed its rebuffed approach to Apache Corp. (NYSE: APA), the market reacted with skepticism.

One bright spot though: the proposed deal shone a spotlight on the favored Permian Basin, where M&A activity remains strong and Apache holds the third-largest acreage position.

On APC’s Oct. 28 conference call to discuss third-quarter results, chairman and CEO Al Walker said, “Growth will not be rewarded in this environment, and focusing on building and preserving value is more important at this time.”

He was referring to reining in drilling activity and costs, but not, apparently, to making a bigger splash, because just days later, he admitted he had made a foiled attempt to open M&A discussions with Apache.

Bloomberg broke the story of an unnamed suitor for Apache on a Sunday night. Analysts’ either puzzled or outright negative comments trickled out Tuesday. Then on Wednesday, Anadarko finally came public, with Walker saying it wanted to make a non-binding run at Apache and enter a confidentiality agreement, but its overture was “summarily rejected and no discussions of substance occurred.”

“The proposed all-stock transaction, which included a modest premium, would have been highly accretive to Anadarko on a cash flow per-share basis, even before synergies,” Walker said in a press comment.

“Further, based on public information and Apache's historic financial and operating underperformance, the proposed transaction offered shareholders of both companies numerous value-creation opportunities given Anadarko's demonstrated success at building value through operational excellence, proven capital allocation, and active portfolio management,” he said.

"…based on our analysis, which shows that Apache appears to trade at or near full value currently, the offer was withdrawn."

Once Anadarko was revealed as the suitor, analysts reacted swiftly. Tudor, Pickering, Holt & Co. said it painfully downgraded Anadarko, although it still likes the company’s global asset mix. “But simply put, the consideration of acquiring APA drives overarching concern on strategic thoughts around acquisitions. Hard to envision the rationale for combining the assets absent improved balance sheet strength, given cultural/portfolio overlap.

“The deal would have levered APC to a large mature international asset base, which we believe APA has efficiently run, while bolting on a smaller core unconventional business in the U.S., where APC is long inventory. High grading assets is paramount for equity success in our view and it was hard to see how this combination would have accomplished that task.”

Morgan Stanley’s Evan Calio weighed in: “In our view, this represented a classic M&A defense: leak the offer (drive up acquiree's stock), several days later leak the buyer's identity (drive their stock down), particularly in this case where a vanilla APA/APC transaction would be viewed negatively for APC and flattering to APA.”

Analysts said the attempt by Anadarko is a one-off deal that does not presage a wave of similar high-profile deals, at least, not yet. M&A action is still predicted, but not for another quarter or two.

"We see the recent takeover bid for APA as likely a one-off since it seems many potential buyers believe the price expectations from would be sellers are still too high (as evidenced by the reported small premium that was offered for APA)," said Richard Tullis, energy equity analyst at Capital One Securities Inc.

It is unlikely that Apache would want to sell. Founded more than 50 years ago, it has always favored a corporate culture of growth by large acquisitions and strategic flexibility in good times and bad. From founder Raymond Plank (now retired) on down, there is a vow to build it to last.

Tullis said APA’s widely disbursed asset base could make deal synergies more difficult to achieve and the number of potential acquirers in a transaction of this size is limited. "Plus, APA’s relatively new senior management team could make the case they have not been given adequate time to show they can deliver more value for the company," he added.

Anadarko, meanwhile, has grown organically through domestic and international plays, but large acquisitions that move the needle are not out of the question. In summer 2006 it acquired two independents within days, Kerr-McGee Corp. and Western Gas Resources, for an aggregate $23.3 billion, all-cash and including debt.

The CEOs of Anadarko and Apache remained coy, both speaking of their respective portfolios and strategies at conferences across the country the very day the press was unveiling the foiled attempt.

On Tuesday while speaking at Hart Energy’s Executive Oil Conference in Midland, Texas, Apache CEO John Christmann made no mention of the rumored deal. Fairly new to the top job, having assumed the CEO chair in January of this year, he no doubt doesn’t want to relinquish it this soon, especially when he is touting his achievements in the midst of a two-year company turnaround.

Among the recent moves by APA: British Columbia and Australia LNG assets, sold. Australian and Argentine upstream assets, sold. Gulf of Mexico fields Lucius and Heidelberg fields, sold. All told, at least $10.5 billion of non-strategic assets sold.

In addition, the company closed its Tulsa office and a new upper-management team installed. An unconventional resources team also was created. Total rigs idled is 86 rigs since September 2014 and 2015. The company budget is down 60%, one of the largest percentage cuts among its peer group.

An Oppenheimer research comment said a merger between Apache and Anadarko is not a good fit. RBC Capital Markets said Apache has no need to sell, but if it did embrace a buyer, it would do so at $70-$80 a share. Apache traded around $48 on November 11.

In the U.S., Anadarko has multiple decades of high-quality inventory in the Wattenberg/Delaware Basin, which will likely expand in 2016…as the company delineates additional zones and proves up downspacing potential, according to RBC. “There is little need, in our view, to add a large scattered footprint, much of which is outside the core unconventional fairways, as we believe the current Delaware asset base already has the potential to reach similar size and scale to the Wattenberg.

“From an international perspective, APC management commented as recently as yesterday morning they have little interest in buying international assets and would rather grow through organic exploration and development. Being a top quality explorer is one thing, but we would be hard pressed to see how buying large mature fields internationally would strategically fit and how it would be accretive for the organization given APA has done a great job efficiently running both Egypt and the North Sea.”

If the Permian part of Apache’s portfolio was one of the main attractions, it is no wonder. Third-quarter conference calls were full of Permian news updates and it was all good. EOG completed a record-breaking well in the Delaware Basin that had an IP-30 of 3,490 boe/d. Parsley Energy Inc. just set a Permian Basin-wide record for the fastest drilling time on a long lateral, going out 7,128 feet in just 41 hours at its Wolfcamp A well in Reagan County. Chevron said at the Midland conference that it has reduced the spud-to-release time in the Permian by an average 55%.

Speakers at Hart Energy’s conference in Midland that same week indicated about half the reduced costs they’re achieving in the Permian come from lower service fees and about half from efficiency gains: technical applications and increased knowledge. These advances will endure when oil prices recover, for once the top of the learning curve is reached, there’s no going back, although an oil and gas price recovery will be followed by service cost inflation once again, as always.

Leslie Haines can be reached at lhaines@hartenergy.com.