01/08/2014 - 15:27

Apache plans to exit Wheatstone

01/08/2014 - 15:27

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US-based oil and gas company Apache Corporation has admitted it intends to completely exit liquefied natural gas projects, including its 13 per cent interest in Chevron’s Wheatstone project.

Apache plans to exit Wheatstone
Apache has a 13 per cent stake in Chevron's Wheatstone project.

US-based oil and gas company Apache Corporation has admitted it intends to completely exit liquefied natural gas projects, including its 13 per cent interest in Chevron’s Wheatstone project.

The move comes as the company comes under pressure from activist investor Jana Partners to divest its Australian and Canadian LNG projects and focus on developing its highly profitable US shale projects.

Apache chief executive Steven Farris announced the exit plans on Thursday in the US as he released its second quarter results of $US505 million.

“Consistent with the company's ongoing repositioning for profitable and repeatable North American onshore growth, Apache intends to completely exit the Wheatstone and Kitimat (in Canada) LNG projects,” Mr Farris said in a statement.

“In addition, Apache is evaluating its international assets and exploring multiple opportunities, including the potential separation of some or all of these assets through the capital markets.”

Apache owns 13 per cent of Chevron’s Wheatstone LNG project, which is now 38 per cent complete according to Apache’s second quarter earnings release.

Mr Farris, who is also chairman and president, said during a conference call that Apache felt compelled to address the rumours about further divestment from international assets.

Last year it divested producing assets in the Gulf of Mexico, Canada, Argentina and a noncontrolling interest in Egypt.

“In the past we haven’t said what we’re going to do, today we felt like with all the discussion out there we felt like we had to discuss some of this,” Mr Farris said.

He said Apache was not in a hurry to sell off its assets and believed it could get good prices, but would not provide a timeline or specify a method for the sales.

“With respect to what we have sold in the past and the way I feel about the future is I think we have gotten very fair prices for what we have sold,” he said.

Apache’s projects in the Permian region achieved record production last quarter and Mr Farris said it was excited about initial results in emerging plays in the East Texas Eagle Ford and Canyon Lime.

"Apache's onshore North American liquids production increased 18 per cent on a pro forma basis in the second-quarter 2014 compared with the same period a year ago," he said.

“I see North American onshore sales as a different business than what we are doing internationally.

“They take different expertise, they take different time frames, they take really scientific skill sets.

“I think that it is important for us to recognise that and recognise that if we’re going to be the best that we can be we need to concentrate on the things that we have the most of and I think have the greatest growth future.’’

The exit announcement follows the move of former Perth-based managing director Faron Thibodeaux to the US to the lead the Texan development, which achieved a record-breaking performance in the quarter.

Mr Thibodeaux is due to be guest speaker at an American Chamber of Commerce in Australia event in Perth on Thursday August 7.

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