The path of a rumor is often as interesting -- and tortuous -- as the rumor itself. Just look at Wednesday's rumor that Occidental Petroleum (OXY) had plans to acquire exploration and production company Apache (APA).
Here's how it all unfolded: Shares of Apache spiked 11% Wednesday morning following a report published on Oil and Gas People, an industry jobs and news website, claiming Occidental planned to acquire Apache in a deal worth $25 billion. This would have put a roughly 19% premium on Apache's market cap.
As the M&A story gained steam, Melissa Schoeb, a spokeswoman for Occidental, said the company had no knowledge of the information in the Oil and Gas People report, and Apache told Real Money it does not comment on M&A rumors.
Occidental denied the rumor and by midday Oil and Gas People was compelled to take down the Occidental-Apache post, a representative from Oil and Gas People told Real Money.
But there may have been more to Oil and Gas People's decision to remove the report from their website: Parts of it appear to have been plagiarized.
Real Money was contacted Wednesday evening by Omar Mawji, a buy-side energy analyst and a writer for Geopolitical Monitor, a Canada-based international intelligence publication and consultancy. Mawji said in an email that he wrote a piece last month titled "The Case for Occidental Petroleum (OXY) Buying Apache (APA)," in which he detailed reasons why Occidental might want to buy Apache.
Several paragraphs of Mawji's report were repeated word for word in Oil and Gas People's report without attribution. Mawji was alerted of the issue by friends who saw the report and by Geopolitical Monitor, which noticed a spike in traffic on Mawji's piece. Furthermore, the Oil and Gas People report took Mawji's work, which was speculative, to state that a merger was happening. Representatives from Oil and Gas People did not immediately respond to requests to comment.
While the origins of the Oil and Gas People report are dubious, it was successful in spurring speculation of Apache as a takeover target. Trading volume in Apache and Occidental, which is a holding in Jim Cramer's Action Alerts PLUS portfolio, was higher than usual in recent days in response to the news. Also, BMO Capital Markets released a report on Thursday titled "Stranger Things Have Happened, Part 2," which, like Mawji's report, examines the strategic benefits of a merger between the two companies. Part 1 of BMO's report was published in November when Apache was a takeover target by Anadarko Petroleum (APC).
"Apache's unique asset base of free cash positive North Sea and Egypt businesses, combined with a resource-rich and shallow-decline North America onshore position (Permian) has surprisingly positioned it at the forefront of large-cap E&P M&A speculation this cycle," Phillip Jungwirth of BMO wrote in Thursday's report. BMO has a $55 price target on Apache and a Market Perform rating.
While Apache may very well be an attractive takeover target, these events should serve as a warning to investors to tread carefully when acting -- and investing -- based on a rumor.
This article has been updated to reflect that Occidental had no knowledge of the information in the report by Oil and Gas People and to provide more details and commentary from Omar Mawji.