Apache Seeks Partner for Canada LNG Project as Costs Balloon
Apache Corp. (APA), the oil and gas producer with assets from West Texas to Australia, plans to sell part of its stake in a Canadian natural gas export terminal as spending on the project is expected to surge.
The company, which has partnered with Chevron Corp. (CVX) to harness vast reserves in British Columbia for export to Asia, wants to reduce the $1 billion it will have to spend in 2014 on the Kitimat liquefied natural gas project, said Chairman and Chief Executive Officer Steven Farris.
“We can’t afford that,” he said in an interview yesterday in advance of the Houston-based company’s investor meeting today. “We’ve had serious discussions with a number of buyers, all in Asian markets.”
Apache will reduce spending by almost 20 percent after selling more than $7 billion in assets in an effort to move away from growth abroad and spend cash from international operations on prospects in North America, Farris said.
Drilling in Texas, New Mexico and Oklahoma will form the centerpiece of $8.5 billion in spending in 2014 to boost output of crude and natural gas liquids by as much as 18 percent in the continent, according to slides prepared for today’s presentation.
Apache produced the equivalent of 537,000 barrels of oil a day in 2013, the same as in 2009, although 60 percent of the company’s output last year was concentrated in 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 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, which is 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 presentation. “We’ve put ourselves in a position to really be able to grow.”
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