Feb. 26 (Bloomberg) -- Apache Corp. is seeking a buyer for part of its 50 percent stake in a Canadian liquefied natural gas export terminal as its spending on the project is projected to surge to $1 billion this year.
“We can’t afford that,” Steven Farris, chairman and chief executive officer of the Houston-based oil and gas producer, said in an interview yesterday. “We’ve had serious discussions with a number of buyers, all in Asian markets.”
The Kitimat project is one of more than a dozen proposals to harness vast gas reserves in British Columbia for export to Asia, where the fuel price can be five times higher. Farris is “very confident” Apache and its partner, Chevron Corp., will find a buyer this year to reduce their share of costs, he said at an investor day meeting today.
The companies have yet to make a final investment decision on the project and Apache declined today to provide an updated cost estimate for it. Farris said in March 2012 the terminal and a pipeline for it would cost about $6 billion.
Spending so far has been concentrated on clearing rights of way and preparing sites for construction, Rod Eichler, CEO of the project, said at the investor meeting today. The companies still must negotiate with aboriginal groups and the British Columbia government, Eichler said.
Petroliam Nasional Bhd., Malaysia’s state-owned oil company, is also seeking to sell a 25 percent stake in its proposed Canadian LNG project, Chief Executive Officer Shamsul Azhar Abbas said at a conference yesterday in Singapore.
Apache fell 3.9 percent, the most in six months, to $79.82 at the close in New York. The company plans to reduce spending this year by about 19 percent after selling more than $7 billion in assets. The company is focused on using cash from international operations for North American prospects, Farris said.
Drilling in Texas, New Mexico and Oklahoma will form the centerpiece of $8.5 billion in exploration and production spending during 2014 to boost output of crude and natural gas liquids by as much as 18 percent in the continent, according to company slides.
Excluding assets that have been or will be sold, the company produced the equivalent of 537,000 barrels of oil a day in 2013, unchanged from 2009, with 60 percent of output last year from North America. Operations in Egypt and the U.K.’s North Sea, which generate about $1 billion a year in cash, will help fuel growth in liquids output in the U.S. and Canada of as much as 16 percent a year through 2016, according to the slides.
In Australia, the company expects to boost output by the equivalent of as much as 25,000 barrels a day. Apache’s participation in the country’s Wheatstone gas export project, expected to begin producing in 2016, will generate more than $1 billion a year beginning in 2018, Farris said.
“We’re a smaller company,” Farris said in the interview. “We’ve put ourselves in a position to really be able to grow.”
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