Apache ‘eyes sale of Wheatstone stake’

apache08 July 2014, News Wires – US independent Apache is reportedly seeking a buyer for its interests in the Wheatstone liquefied natural gas project in Australia.

The company is in early discussions with potential buyers for its holdings in Chevron’s A$29 billion ($27 billion) project in Western Australia, said people with knowledge of the talks cited by Bloomberg.

Macquarie Group and Goldman Sachs Group are advising Houston-based Apache on the sale, the people said. Neither would comment.

In the past year, Apache has sold its Argentinian operations, deep-water assets in the Gulf of Mexico and a stake in its Egypt business as it seeks to reduce net debt, which stood at $8 billion at the end of March, data compiled by Bloomberg show.

Its 13% stake in the Wheatstone project could be valued at about $2.5 billion, according to UBS.

Analysts told the news wire that Apache may see more attractive opportunities for capital spending in the US, where the company has large shale holdings.

A sale of the Wheatstone stake would reduce Apache’s capital spending commitments by $1.4 billion this year and $800 million in 2015, UBS analysts led by William Featherston said. Proceeds could be used to fund further share buybacks, the added.

The Wheatstone plant will produce 8.9 million tonnes per annum of LNG and is due to start in 2016, according to its website.

Apache also holds a 65% interest in the Julimar and Brunello offshore fields, which it operates and which will provide gas to the Wheatstone facility.

Wheatstone is among seven LNG export developments being built in Australia at a cost of about $190 billion to meet Asian demand. High construction costs and a strong Australian dollar have hurt project developers including BG Group, with the bill for Chevron’s Gorgon LNG project surging to $54 billion from an estimate of $37 billion in 2009.

Chevron owns 64% of the Wheatstone project. Kuwait Foreign Petroleum Exploration, known as Kufpec, holds 13% while a group of Japanese companies including Tokyo Electric Power (Tepco) jointly hold an 8% interest.

Chinese energy companies may be interested in buying Apache’s Wheatstone holdings, Nik Burns, a Melbourne-based analyst at UBS, told Bloomberg. Kufpec may also consider buying the stake, he added.

Shell agreed in January to sell its 6.4% stake in the Wheatstone project and an 8% stake in the Wheatstone-Iago gas fields for $1.14 billion to Kufpec. The Wheatstone facility will supply fuel to customers in Asia such as Tepco, Chubu Electric Power and Tohoku Electric Power.



– Upstream

About the Author