VICTORIA — A multibillion-dollar deal signed Monday between Australian and American oil and gas companies has brought a new backer to a proposed liquefied natural gas project on British Columbia's northwest coast at Kitimat.
Houston-based Apache Corp., announced it is selling its ownership in two liquefied natural gas projects, including Kitimat LNG, to Australia's Woodside Petroleum Ltd. for $2.75 billion.
The agreement includes Apache's 50 per cent stake in the Chevron-backed Kitimat project and related upstream lands in the Horn River and Liard natural gas basins in B.C.'s northeast.
The transaction also involves Australian subsidiary Apache Julimar Pty. Ltd., which owns a 13 per cent stake in the Wheatstone LNG project and a 65 per cent interest in the area that includes the Julimar/Brunello offshore gas fields and the Balnaves oil development.
In B.C., Natural Gas Minister Rich Coleman said the deal will strengthen the Kitimat LNG project, which has been in development, but the partners have yet to announce a final investment decision.
"In moving forward, I think it probably stabilizes some of their marketability, probably their customers and certainly with those two companies working together that's a pretty formidable team of people that can bring that project to fruition," Coleman said.
"It's a good relationship that will develop out of these two groups and they are both globally large enough companies, both Chevron and Woodside, to do a deal."
Last summer, Apache announced that it planned to drop out of the Kitimat LNG project and the Wheatstone LNG project in Australia.
The company said it wanted to make its North American onshore operations the focus of its business and was weighing its options when it comes to its international holdings.
Farris has said that Apache's exit from Kitimat LNG will not detract from its value, describing the project as world class.
On Monday, Apache said in a statement it anticipates net proceeds of about $3.7 billion. That includes its expenses between June 30 and the transaction's closing date in the first quarter of 2015. The company may use proceeds to lower debt, buy back stock or for other purposes.
The Kitimat sale is subject to certain operator consents.
Apache said that once the transaction closes, it will still have upstream acreage off the shore of Western Australia in the Carnarvon, Exmouth and Canning basins along with related hydrocarbon reserves and production.
The company will also keep its 49 per cent ownership interest in Yara Holdings Nitrates Pty. Ltd. and 10 per cent interest in the related ammonium nitrate plant.
The company's stock added $1.16, or 2.1 per cent, to $57.60 in pre-market trading.
