Apache Canada, Chevron Canada Announce Joint Venture For Kitimat LNG Project

 Apache Canada, Chevron Canada Announce Joint Venture For Kitimat LNG Project

- Chevron will market LNG, operate plant and pipeline assets

- Apache will operate upstream development of 644,000 acres in British
Columbia's giant Horn River, Liard shale gas discoveries

PR Newswire

HOUSTON, Dec. 24, 2012

HOUSTON, Dec. 24, 2012 /PRNewswire/ --Apache Corporation (NYSE, Nasdaq: APA)
today announced that its subsidiary Apache Canada Ltd. has signed a broad
agreement with Chevron Canada Limited to build and operate the Kitimat LNG
project and develop world-class shale gas resources at the Liard and Horn
River basins in British Columbia, Canada.

(Photo: http://photos.prnewswire.com/prnh/20121224/DA34274)

Chevron Canada, a subsidiary of Chevron Corp (NYSE: CVX), and Apache Canada
each will become a 50 percent owner of the Kitimat LNG plant, the Pacific
Trail Pipeline and 644,000 gross undeveloped acres in the Horn River and Liard
basins. Chevron Canada will operate the LNG plant, which will be located on
the northern British Columbia coast, and the pipeline; Apache Canada will
operate the upstream assets.

"This agreement is a milestone for two principal reasons: Chevron is the
premier LNG developer in the world today with longstanding relationships in
key Asian markets, and the new structure will enable Apache to unlock the
tremendous potential at Liard, one of the most prolific shale gas basins in
North America," said G. Steven Farris, Apache's chairman and chief executive
officer.

"With experience developing LNG projects, marketing expertise and financial
wherewithal, Chevron is the preferred coventurer to join Kitimat LNG," Farris
said. "Apache has a proven record in finding and developing shale gas
resources in Canada and is the logical operator for the upstream elements of
the joint venture.

"We are pleased to expand our relationship with Chevron that began with the
Wheatstone LNG project now under construction in Western Australia," Farris
said. "Kitimat LNG is the first mover among British Columbia LNG projects, and
we expect the momentum of this project will accelerate with this new joint
venture."

Chevron is the operator and led marketing efforts at Wheatstone, a two-train
plant with capacity of 8.9 million tons of LNG per annum that is expected to
commence operations in 2016. Chevron also operates the Gorgon LNG project in
Australia and LNG Angola.

Encana and EOG Resources – currently 30 percent non-operating partners in
Kitimat LNG and Pacific Trail Pipeline – will sell their interests to Chevron
and exit the venture. As part of the transaction with Chevron, Apache will
increase its ownership of the plant and pipeline to 50 percent from 40
percent.

Apache, an experienced producer of unconventional oil and gas resources, will
operate the new joint venture's development of 220,000 gross acres in the Horn
River Basin and 424,000 gross acres in the Liard Basin. Chevron will purchase
a 50 percent interest in undeveloped upstream assets in the Liard Basin from
Apache and other Horn River assets from Encana, EOG and Apache.

"At Liard and Horn River, we have built substantial positions in two of the
most prolific shale gas plays in North America, with more than 50 trillion
cubic feet of resource potential," Farris said.

In June, Apache announced long-term test results from three wells at Liard,
including the D-34-K well, which was drilled to a vertical depth of 12,600
feet with a 2,900-foot lateral and a six-stage hydraulic fracturing
completion. The 30-day initial production rate averaged 21.3 million cubic
feet of gas per day, or 3.6 MMcf per day per frac stage. The ultimate recovery
from the D-34-K well is estimated to be 18 billion cubic feet of gas. "We
believe this is the most prolific shale gas resource test in the world,"
Farris said.

As part of this transaction, Apache will sell to Chevron a 50 percent interest
in its 100 percent-owned undeveloped Liard and Horn River acreage for $550
million. Apache will pay Chevron to equalize interests in other Horn River
acreage owned by Apache, Encana and EOG. Apache also will pay Chevron to
increase Apache's ownership of the LNG plant and pipeline projects to 50
percent. Apache's net proceeds are expected to be approximately $400 million.
The transaction, which is subject to certain government approvals, is expected
to close in the first quarter of 2013.

As is customary in LNG projects, Apache and Chevron will explore sales of
equity interests in the plant and upstream assets to foundation customers.

Kitimat LNG, at Bish Cove on the northern British Columbia coast approximately
400 miles (650 km) north of Vancouver, is currently completing front-end
engineering and design, and early site work is under way. Current plans call
for two liquefaction trains, each with expected capacity of 5 million tons of
LNG per annum (about 750 million cubic feet of gas per day). Kitimat has
received all significant environmental approvals and a 20-year export license
from the Canadian federal government.

The 290-mile (463-km) Pacific Trail Pipeline will provide a direct connection
between the Spectra Energy Transmission pipeline system and the Kitimat LNG
terminal. The project has strong support from many of the First Nations along
the route.

"We want to thank and acknowledge EOG and Encana for their contribution to the
development of the Kitimat project," Farris said. "We appreciate the hard work
of many employees and contractors to advance the project to this stage and the
strong support the plant and pipeline projects have received from local
communities, provincial and federal officials and the Haisla and other First
Nations.

"Construction of the plant and pipeline will have a significant economic
impact, and the operational phase will provide opportunities for employment as
well as royalties and tax revenues for the Federal, Provincial and local
governments for many years," he said. "Chevron and Apache will continue to
develop this project in a safe and environmentally responsible manner."

RBC Capital Markets was advisor to Apache, EOG and Encana in the sale
preparation of portions of their Horn River Basin holdings.

About Apache

Apache Corporation is an oil and gas exploration and production company with
operations in the United States, Canada, Egypt, the United Kingdom North Sea,
Australia and Argentina. Apache posts announcements, operational updates,
investor information and copies of all press releases on its website,
www.apachecorp.com.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements can be identified by words
such as "anticipates," "intends," "plans," "seeks," "believes," "estimates,"
"expects" and similar references to future periods. These include statements
about schedules, costs and government approvals of development of the Kitimat
LNG project and Pacific Trail Pipelines, LNG marketing activities and future
production and exploration prospects in Western Canada. While forward-looking
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Cautionary Note to Investors

The United States Securities and Exchange Commission ("SEC") permits oil and
gas companies, in their filings with the SEC, to disclose only proved,
probable, and possible reserves that meet the SEC's definitions for such
terms. Apache uses certain terms in this release, such as "resource
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do not take into account the certainty of resource recovery, which is
contingent on exploration success, technical improvements in drilling access,
commerciality and other factors, and are therefore not indicative of expected
future resource recovery and should not be relied upon. Investors are urged to
consider carefully the disclosure in Apache's Annual Report on Form 10-K for
the fiscal year ended December 31, 2011, and amendments thereto, available
from Apache at www.apachecorp.com or by writing Apache at: 2000 Post Oak
Blvd., Suite 100, Houston, Texas 77056 (Attn: Corporate Secretary). You can
also obtain this report from the SEC by calling 1-800-SEC-0330 or from the
SEC's website at www.sec.gov.

APA-CA

SOURCE Apache Corporation

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