Apache Corp. (NYSE, Nasdaq: APA) has an agreement to sell its Australian subsidiary Apache Energy Ltd. to a consortium of private equity funds managed by Macquarie Capital Group Ltd. and Brookfield Asset Management Inc. (NYSE: BAM) (TSX: BAM.A) (Euronext: BAMA) for cash payment of $2.1 billion.
Assets of Apache Energy Ltd. and its subsidiaries averaged production of approximately 49,000 barrels of oil equivalent per day in March. With the announcement of this sale, Apache is fully exiting its exploration and production business in Australia, but will retain its 49% ownership interest in fertilizer producer Yara Pilbara Holdings Pty Ltd. On April 2, Apache announced the completion of sale of its Wheatstone LNG project and related oil and natural gas properties to Woodside Petroleum Ltd. for $2.8 billion.
John J. Christmann IV, Apache CEO and president, said, “Over the last five years, we have transitioned Apache's primary growth engine to North America onshore through the announcement or completion of approximately $17 billion of asset purchases and $17 billion of asset sales. Following the sale of our Australian assets, approximately 70% of Apache's production will come from North America onshore."
Christmann noted that the company's North American position is complemented by its inventory of prospects and assets in the North Sea and Egyptian regions.
Selling its remaining Australian E&P assets is a positive for Apache, noted Global Hunter Securities analysts in a note to investors Thursday. The deal generates an "attractive multiple (~$7K/flowing Mcfe) given the gassy nature of the assets and APA's current corporate valuation of $7.9K/flowing Mcfe. The deal enables APA to narrow its focus on its core NA onshore program, which is now estimated at ~70% of APA’s production. We now estimate pro forma liquidity of ~$10B vs. APA's previously announced 2015 capex program of $3.6B-$4.0B (note that this program included ~$450MM-$510MM for Australia and GOM)," the analysts said.
The transaction is expected to close mid-year 2015. The effective date of the sale is Oct. 1, 2014.