Woodside to buy Apache’s interests in Wheatstone, Kitimat LNG for $2.75 billion

Woodside Petroleum Ltd. has agreed to acquire interest in the Wheatstone LNG and Kitimat LNG projects, respectively in Western Australia and British Columbia, along with accompanying upstream oil and gas reserves, belonging to Houston independent Apache Corp. for $2.75 billion.

Apache also will be reimbursed for its net expenditure in the Wheatstone and Kitimat LNG projects, estimated at $1 billion, between June 30, 2014, and closing, expected in first-quarter 2015. Based on current estimates, Apache’s net proceeds upon closing are expected at $3.7 billion.

In the deal, Woodside will acquire Apache’s equity ownership in its Australian subsidiary, Apache Julimar Pty. Ltd., which owns 13% interest in the Wheatstone LNG project and 65% interest in the WA-49-L block, including the Julimar-Brunello offshore gas fields and the Balnaves oil development (OGJ Online, July 11, 2012).

The transaction 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. The sale of the Kitimat LNG project is subject to certain operator consents.

Earlier this year, Kuwait Foreign Petroleum Exploration Co. (Kufpec) agreed to acquire Royal Dutch Shell PLC’s 6.4% interest in Wheatstone LNG, nearly doubling Kufpec’s interest in the $29 billion (Aus.) LNG project to 13.4% from 7% (OGJ, Jan. 27, 2014, p. 24).

Chevron Canada acquired its 50% interest in Kitimat LNG in 2013 along with half interest in the proposed Pacific Trail Pipeline and in 644,000 acres in the Horn River and Liard basins in British Columbia (OGJ Online, Dec. 26, 2012). The two-train Kitimat project targets a 2016 start-up date.

“Today’s announcement marks the successful completion of one of our primary strategic goals of exiting the Wheatstone and Kitimat LNG projects,” said G. Steven Farris, Apache chairman, chief executive officer, and president. The company over the summer first stated its intention to exit the Wheatstone and Kitimat projects (OGJ Online, Aug. 1, 2014).

Apache will continue retain upstream acreage offshore Western Australia in the Carnarvon (OGJ Online, Apr. 11, 2013); Exmouth (OGJ Online, Feb. 16, 2010); and Canning basins (OGJ Online, Nov. 4, 2013; Aug. 18, 2014); along with related hydrocarbon reserves and production. Apache will also retain its 49% ownership interest in Yara Holdings Nitrates Pty. Ltd. and 10% interest in the related ammonium nitrate plant.