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Apache Sells Kitimat, Wheatstone LNG Stakes to Woodside For $2.75B

Apache Corp. on Monday agreed to a $2.75 billion deal with Woodside Petroleum Ltd. to sell its half-stake in the Kitimat liquefied natural gas (LNG) export project in British Columbia (BC), acreage in the Horn River and Liard basins, and its interest in Australia's Wheatstone LNG facility.

Australia's largest independent producer would take over a 50% interest in Kitimat LNG in Bish Cove, BC, half-owned and operated by Chevron Corp. (see Daily GPI, Dec. 26, 2012). Woodside also is buying Apache Julimar Pty Ltd.'s 13% interest in the Wheatstone LNG facility and a 65% stake in Australia's offshore WA-49-L Block, which includes the Julimar/Brunello gas fields and the Balnaves oil development.

Houston-based Apache also is to receive about $1 billion net from Woodside for capital invested in Kitimat and Wheatstone for the last half of this year through closing, which is expected before the end of March.

The LNG projects have been on Apache's list of projects for sale since July, part of a wide-ranging plan to monetize most of its international portfolio (see Daily GPI, July 31). Major investor Jana Partners LLC has been pressuring Apache to drill exclusively in the United States (see Daily GPI, July 22).

The sales proceeds, estimated at $3.7 billion, would be used to reduce debt, repurchase shares and "pursue other opportunities that enhance our asset base and drive profitable production growth," said Apache CEO G. Steven Farris.

Apache bought a controlling interest in the Kitimat facility almost five years ago (see Daily GPI, Jan. 14, 2010). It also has worked on Wheatstone since its inception.

"I am proud of Apache's legacy in advancing the Wheatstone and Kitimat LNG projects, and I am confident that Woodside's participation will have a positive impact in seeing these world-class LNG facilities through to first production," Farris said.

Once the transaction is completed, Apache still would have some upstream acreage offshore Western Australia in the Carnarvon, Exmouth and Canning basins along with related hydrocarbon reserves and production. It also retains its 49% ownership interest in the country's Yara Holdings Nitrates Pty Ltd. and 10% stake in the related ammonium nitrate plant.

Woodside has operated Australia's landmark North West Shelf project since 1984, which is one of the world's top LNG facilities. With the start-up of Pluto LNG in 2012, Woodside was operating six of the seven LNG processing trains in the country. It also is developing Australia's Browse Floating LNG development.

The Kitimat stake increases Woodside's LNG prowess in North America. TransCanada Corp. in June said it was planning to build the 1.9 Bcf/d Merrick Mainline to serve the facility (see Daily GPI, June 4). The 161-mile, 48-inch diameter pipeline extension would run from Dawson Creek, BC, to Nova Gas Transmission Ltd. (NGTL) in the Prince Rupert region of TransCanada's BC and Alberta gathering network. NGTL has agreements now in place with Chevron and Apache to transport gas through its system to their Pacific Trail Pipeline that would terminate at the Kitimat terminal.

In June, subsidiary Woodside Energy Trading Singapore Pte Ltd. agreed to buy 0.85 million metric tons/year (mmty) of LNG over a 20-year period from Cheniere Energy Inc.'s planned export facility in Corpus Christi, TX (see Daily GPI, June 30). The project is being designed and permitted for up to three trains, with aggregate design capacity of 13.5 mmty. Deliveries are to begin once the second train enters service, now expected sometime in 2019.

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