Apache has agreed to sell its interest in two LNG projects, Wheatstone and Kitimat, along with accompanying upstream oil and gas reserves, to Woodside for a purchase price of US$2.75 billion.
Apache will also be reimbursed for its net expenditure in the Wheatstone and Kitimat LNG projects between June 30, 2014, and closing which is estimated to be approximately US$1 billion, according to an Apache statement.
Under the terms of the agreement, Apache will sell its equity ownership in its Australian subsidiary, Apache Julimar, which owns a 13% interest in the Wheatstone LNG project and a 65% interest in the WA-49-L block which includes the Julimar/Brunello offshore gas fields and the Balnaves oil development. The transaction, which has an effective date of June 30, 2014, will also include Apache’s 50% interest in the Kitimat LNG project and related upstream acreage in the Horn River and Liard natural gas basins in British Columbia, Canada.
Based on current estimates, Apache’s net proceeds upon closing are expected to be approximately US$3.7 billion. Receipt of proceeds from this transaction will trigger an estimated US$650 million cash tax liability, approximately US$600 million of which is associated with the income tax due on Apache’s Overall Foreign Loss account balance. Upon incurring this income tax liability, Apache estimates that it will have the flexibility to repatriate cash generated from foreign operations and/or future international strategic transactions with minimal U.S. cash tax impact.
Upon completion of the transaction, Apache will continue to hold upstream acreage offshore Western Australia in the Carnarvon, Exmouth, and Canning basins along with related hydrocarbon reserves and production. Apache will also retain its 49% ownership interest in Yara Holdings Nitrates and 10% interest in the related ammonium nitrate plant.
The transaction is expected to close in the first quarter of 2015.
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