Regional LNG: Apache sells two LNG projects to Woodside for $2.75b
Tuesday, December 16 2014 - 12:55 AM WIB
US oil and gas firm Apache Corporation announced Monday it has agreed to sell its interest in two LNG projects, Wheatstone LNG and Kitimat LNG, along with accompanying upstream oil and gas reserves, to Woodside Petroleum Limited, Australia?s second biggest oil and gas producer, for a purchase price of US$2.75 billion.
Apache will also be reimbursed for its net expenditure in the Wheatstone and Kitimat LNG projects between June 30, 2014, and closing which is estimated to be approximately $1 billion, the company added.
Under the terms of the agreement, Apache will sell its equity ownership in its Australian subsidiary, Apache Julimar Pty Ltd, which owns a 13-percent interest in the Wheatstone LNG project and a 65-percent interest in the WA-49-L block which includes the Julimar/Brunello offshore gas fields and the Balnaves oil development.
The transaction, which has an effective date of June 30, 2014, will also include Apache's 50-percent interest in the Kitimat LNG project and related upstream acreage in the Horn River and Liard natural gas basins in British Columbia, Canada.
Based on current estimates, Apache's net proceeds upon closing are expected to be approximately $3.7 billion.
"Today's announcement marks the successful completion of one of our primary strategic goals of exiting the Wheatstone and Kitimat LNG projects. We look forward to the redeployment of the proceeds from this sale, which may be used to reduce debt, repurchase shares and to pursue other opportunities that enhance our asset base and drive profitable production growth," said G. Steven Farris, chairman, chief executive officer and president of Apache Corporation.
Upon completion of the transaction, Apache will continue to hold upstream acreage offshore Western Australia in the Carnarvon, Exmouth, and Canning basins along with related hydrocarbon reserves and production. Apache will also retain its 49-percent ownership interest in Yara Holdings Nitrates Pty Ltd and 10-percent interest in the related ammonium nitrate plant.
The transaction is expected to close in the first quarter of 2015 and is subject to necessary government and regulatory approvals and customary post-closing adjustments. The sale of the Kitimat LNG project is subject to certain operator consents.
Kitimat LNG, located on Bish Cove near the Port of Kitimat, 643 kilometers north of Vancouver, will source natural gas from the Western Canadian Sedimentary Basin and connect it with the dynamic LNG markets in Asia-Pacific, including South Korea, China and Japan, the largest importer of LNG in the world.
Wheatstone is the first LNG project in Australia to support large volumes of third-party supply gas. The first phase of the Wheatstone Project comprises an offshore central processing platform, a 225-kilometer (140-mile) pipeline to shore and onshore gas liquefaction consisting of two processing trains with a combined production capability of approximately 8.9 million tons of LNG per year. The onshore facilities, located at the Ashburton North Strategic Industrial Area near Onslow, also include storage and offloading infrastructure and a domestic gas plant.
Separately, Woodside CEO Peter Coleman said the acquisition was a natural fit with Woodside?s current portfolio and, following a detailed due diligence process, had met Woodside?s internal investment parameters.
?We have taken a disciplined and patient approach to identifying the right growth investment. We are now in a position to take advantage of challenging market conditions and use cash reserves and existing debt facilities to acquire very high quality assets.
?We are also retaining our previous guidance on dividends and we expect our credit ratings to be unchanged. Our capital commitments on both sanctioned projects and sustaining capital are expected to be at a low level of approximately US$0.8 billion each year over the next three years,? he said.
Editing by Reiner Simanjuntak