Apache to sell stakes in LNG projects to Woodside for $2.75 billion

Tue Dec 16, 2014 5:11am EST
 
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BENGALURU/SYDNEY- (Reuters) - Apache Corp APA.N has agreed to sell stakes in two liquefied natural gas developments, Wheatstone in Australia and Kitimat in Canada, for $2.75 billion to Woodside Petroleum (WPL.AX: Quote), which "stress-tested" the projects against low crude prices before signing up to buy them.

Apache, under pressure from activist investor Jana Partners, said in July it planned to exit the two projects. The company is also evaluating a sale or spinoff of its international operations to focus on North American shale wells.

Woodside Petroleum, Australia's top oil and gas producer, said in August it was looking at potential acquisitions as companies such as Shell and Apache offload assets, amid worries about high costs and future prices.

"We have stress-tested the projects on much lower pricing than we normally would just to make sure they are robust and we don't end up with an unrealistic price," Woodside Chief Executive Peter Coleman told a joint analyst and media teleconference on Tuesday.

Apache said it would sell its 13 percent stake in Wheatstone, majority-owned by Chevron Corp (CVX.N: Quote), and its 65 percent interest in the WA-49-L oil and gas block, located offshore western Australia.

The company is also selling its 50 percent stake in the Kitimat LNG project, a joint venture with Chevron, and related oil and gas assets in the Horn River and Liard natural gas basins in British Columbia, Canada.

Analysts expressed relief that Apache was able to strike a deal quickly during a period when crude prices have fallen more than 40 percent.

Coleman described the transaction as one between "a willing buyer and willing seller".

"This is a big win for Apache," analysts at Simmons & Co said in a note to clients. "Given the steep fall in oil prices, we were worried that it might take longer to close this deal.   Continued...

 
Rigs contracted by Apache Corp drill for crude oil locked tight in shale in west Texas’ Permian Basin near the town of Mertzon, Texas October 29, 2013. REUTERS/Terry Wade