Apache Corp. agreed to sell its interest in the Wheatstone LNG project and the Kitimat LNG project, along with accompanying upstream oil and gas reserves, for $2.75 billion to Woodside Petroleum Ltd. Apache will be reimbursed for its net expenditure in the projects between June 30, 2014, and closing, which is estimated to be about $1 billion.
Under the terms of the agreement, Apache will sell its equity ownership in its Australian subsidiary Apache Julimar Pty Ltd. Apache Julimar owns a 13% interest in the Wheatstone LNG project and a 65% interest in the WA-49-L block, which includes the Julimar/Brunello offshore gas fields and the Balnaves oil development. The transaction has an effective date of June 30, 2014, will also include Apache’s 50% interest in the Kitimat LNG project and related upstream acreage in the Horn River and Liard gas basins in British Columbia.
Apache’s net proceeds at closing are expected to be about $3.7 billion. Receipt of the proceeds will trigger an estimated $650 million cash tax liability, about $600 million of which is associated with the income tax due on Apache’s overall foreign loss account balance. Apache expects that it will have the flexibility to repatriate cash generated from foreign operations and/or future international strategic transactions with minimal U.S. cash tax impact.
Once the transaction is completed, Apache will continue to hold upstream acreage in offshore western Australia in the Carnarvon, Exmouth and Canning basins, along with related hydrocarbon reserves and production. Apache will retain its 49% ownership interest in Yara Holdings Nitrates Pty Ltd. and 10% interest in the related ammonium nitrate plant.
The transaction has an expected closing date in first-quarter 2015 and is subject to necessary government and regulatory approvals and post-closing adjustments. The sale of the Kitimat LNG project is subject to certain operator consents.
Recommended Reading
MethaneSAT: EDF’s Eye in the Sky Targets E&P Emissions
2024-03-07 - The Environmental Defense Fund and Harvard University recently launched MethaneSAT, a satellite tracking methane emissions. The project’s primary target: oil and gas operators.
Exclusive: Scepter CEO: Methane Emissions Detection Saves on Cost
2024-04-08 - Methane emissions detection saves on cost and "can pay for itself," Scepter CEO Phillip Father says in this Hart Energy exclusive interview.
Keeping it Tight: Diversified Energy Clamps Down on Methane Emissions
2024-04-24 - Diversified Energy wants to educate on emission reduction successes while debunking junk science.
Qnergy Tackles Methane Venting Emissions
2024-03-13 - Pneumatic controllers, powered by natural gas, account for a large part of the oil and gas industry’s methane emissions. Compressed air can change that, experts say.
CAPP Forecasts $40.6B in Canadian Upstream Capex in 2024
2024-02-27 - The number is slightly over the estimated 2023 capex spend; CAPP cites uncertain emissions policy as a factor in investment decisions.