Apache Corp. 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 Ltd. for a purchase price of $2.75 billion, according to a press release. Apache also will be reimbursed for its net expenditure in the Wheatstone and Kitimat LNG projects, which is estimated to be about $1 billion, between June 30, 2014, and closing.
Under the terms of the agreement, Apache will sell its equity ownership in its Australian subsidiary, Apache Julimar Pty. Ltd., which 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, which has an effective date of June 30, 2014, also will include Apache's 50% 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 about $3.7 billion. Receipt of proceeds from this transaction 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. Upon incurring this income tax liability, Apache estimates that it will have the flexibility to repatriate cash generated from foreign operations
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 also will retain its 49% ownership interest in Yara Holdings Nitrates Pty. Ltd. and 10% interest in the related ammonium nitrate plant.
The transaction is expected to close in first-quarter 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.
Recommended Reading
Permian Gas Finds Another Way to Asia
2024-04-30 - A crop of Mexican LNG facilities in development will connect U.S. producers to high-demand markets while avoiding the Panama Canal.
Silver Linings in Biden’s LNG Policy
2024-03-12 - In the near term, the pause on new non-FTA approvals could lift some pressure of an already strained supply chain, lower both equipment and labor expenses and ease some cost inflation.
Pitts: US, Qatar Face off in LNG ‘Olympics’
2024-05-03 - In the LNG exporting space, the U.S. is squaring off with its fiercest competitor, Qatar, with both countries expected to outpace Australia
API Gulf Coast Head Touts Global Emissions Benefits of US LNG
2024-04-01 - The U.S. and Louisiana have the ability to change global emissions through the export of LNG, although new applications have been frozen by the Biden administration.
Permian NatGas Hits 15-month Low as Negative Prices Linger
2024-04-16 - Prices at the Waha Hub in West Texas closed at negative $2.99/MMBtu on April 15, its lowest since December 2022.