Apache Corp. has agreed to sell its interest in two LNG projects, Wheatstone LNG and Kitimat LNG, along with accompanying upstream oil and gas reserves, to Woodside Petroleum Ltd. for a purchase price of $2.75 billion, according to a press release. Apache also will be reimbursed for its net expenditure in the Wheatstone and Kitimat LNG projects, which is estimated to be about $1 billion, between June 30, 2014, and closing.
Under the terms of the agreement, Apache will sell its equity ownership in its Australian subsidiary, Apache Julimar Pty. Ltd., 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, also will 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 about $3.7 billion. Receipt of proceeds from this transaction will trigger an estimated $650 million cash tax liability, about $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
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 also will retain its 49% ownership interest in Yara Holdings Nitrates Pty. Ltd. and 10% interest in the related ammonium nitrate plant.
The transaction is expected to close in first-quarter 2015 and is subject to necessary government and regulatory approvals and customary post-closing adjustments. The sale of the Kitimat LNG project is subject to certain operator consents.
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