Rebalancing continues as Apache sells Alberta oil and gas assets for $214M

Monetizations make key assets like Permian, Central region greater drivers

As part of an ongoing asset monetization and portfolio rebalancing, Houston-based Apache Corp. (NYSE, Nasdaq: APA) has agreed to sell oil and gas producing properties in the Nevis, North Grant Lands and South Grant Lands areas of western Alberta, Canada, to Ember Resources Inc., a private Canadian company, for US$214 million (CAN$220 million), the company said August 15.

The assets comprise 621,000 gross acres (530,000 net acres) and more than 2,700 wells that had average net production of 67 million cubic feet of gas and 237 barrels of liquid hydrocarbons per day from late Cretaceous sands and coal seams during the second quarter of 2013. Apache will retain 100% working interest in horizons below the Cretaceous, such as potential Duvernay and Nisku, in Nevis and North Grant Lands.

The deal is expected to be completed during the third quarter.

"Going forward, Apache is focused on growing our liquids production from a deep inventory of crude oil- and liquids-rich opportunities that generate attractive rates of return on our extensive remaining acreage in Canada's Western Sedimentary Basin," said Rodney J. Eichler, president and COO. "We also remain focused on advancing the Kitimat LNG project to monetize large unconventional resources in the Liard and Horn River basins in northern British Columbia.”

In speaking to attendees at the NAPE Business Conference Wednesday about the company’s leading portfolio positions, John Christmann, VP Permian Region for Apache Corp., pointed to the Liard and Horn River basins as key elements with a resource potential of nearly 10 billion barrels of oil equivalent.

Portfolio rebalancing
Apache previously announced plans to divest $4 billion in assets by year-end 2013 as the company works toward growth and return objectives.

In July, Apache announced an agreement to sell its Gulf of Mexico Shelf operations and properties to Riverstone Holdings affiliate Fieldwood Energy LLC for $3.75 billion. Fieldwood agreed to assume all asset retirement obligations for the properties, which, as of June 30, 2013, Apache estimated at a discounted value of approximately $1.5 billion.

The sale of the aforementioned western Alberta assets puts Apache well on the road to reaching its $4 billion monetization target, adds to the company’s ability to reduce its debt by the $2 billion target, and will enable the company to repurchase additional shares under its 30 million share repurchase program.

“The $3.75 billion announced sale of GOM shelf assets should help increase share buybacks in 2H, and additional asset monetizations would make the key attractive assets, the Permian and Central region assets, a greater driver on a corporate basis,” noted Stifel analysts following the Gulf of Mexico sale.

The Permian basin remains a major growth business for Apache – up 18% Q2 ‘12 to Q2 ’13, noted Christmann Wednesday as he outlined Apache’s “2013 Roadmap to value creation” that included accelerating North American onshore drilling and increasing North American onshore liquids growth by 25%.

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