Apache Canada, Chevron Canada Announce Joint Venture For Kitimat LNG Project

Mon Dec 24, 2012 9:00am EST

* Reuters is not responsible for the content in this press release.

For best results when printing this announcement, please click on the link
below:

http://pdf.reuters.com/pdfnews/pdfnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20121224:nPnDA34274

- Chevron will market LNG, operate plant and pipeline assets
HOUSTON,  Dec. 24, 2012  /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA)
today announced that its subsidiary Apache Canada Ltd. has signed a broad
agreement with Chevron Canada Limited to build and operate the Kitimat LNG
project and develop world-class shale gas resources at the Liard and Horn River
basins in  British Columbia, Canada.

(Photo:  http://photos.prnewswire.com/prnh/20121224/DA34274)

Chevron  Canada, a subsidiary of Chevron Corp (NYSE: CVX), and Apache Canada
each will become a 50 percent owner of the Kitimat LNG plant, the Pacific Trail
Pipeline and 644,000 gross undeveloped acres in the Horn River and Liard basins.
Chevron  Canada  will operate the LNG plant, which will be located on the
northern  British Columbia  coast, and the pipeline; Apache Canada will operate
the upstream assets.  

"This agreement is a milestone for two principal reasons: Chevron is the premier
LNG developer in the world today with longstanding relationships in key Asian
markets, and the new structure will enable Apache to unlock the tremendous
potential at Liard, one of the most prolific shale gas basins in  North
America," said  G. Steven Farris, Apache's chairman and chief executive officer.
 

"With experience developing LNG projects, marketing expertise and financial
wherewithal, Chevron is the preferred coventurer to join Kitimat LNG," Farris
said. "Apache has a proven record in finding and developing shale gas resources
in  Canada  and is the logical operator for the upstream elements of the joint
venture.

"We are pleased to expand our relationship with Chevron that began with the
Wheatstone LNG project now under construction in  Western Australia," Farris
said. "Kitimat LNG is the first mover among British Columbia LNG projects, and
we expect the momentum of this project will accelerate with this new joint
venture."

Chevron is the operator and led marketing efforts at Wheatstone, a two-train
plant with capacity of 8.9 million tons of LNG per annum that is expected to
commence operations in 2016. Chevron also operates the Gorgon LNG project in 
Australia  and LNG Angola.  

Encana and EOG Resources - currently 30 percent non-operating partners in
Kitimat LNG and Pacific Trail Pipeline - will sell their interests to Chevron
and exit the venture. As part of the transaction with Chevron, Apache will
increase its ownership of the plant and pipeline to 50 percent from 40 percent.

Apache, an experienced producer of unconventional oil and gas resources, will
operate the new joint venture's development of 220,000 gross acres in the Horn
River Basin and 424,000 gross acres in the Liard Basin. Chevron will purchase a
50 percent interest in undeveloped upstream assets in the Liard Basin from
Apache and other Horn River assets from Encana, EOG and Apache.

"At Liard and Horn River, we have built substantial positions in two of the most
prolific shale gas plays in  North America, with more than 50 trillion cubic
feet of resource potential," Farris said.

In June, Apache announced long-term test results from three wells at Liard,
including the D-34-K well, which was drilled to a vertical depth of 12,600 feet
with a 2,900-foot lateral and a six-stage hydraulic fracturing completion. The
30-day initial production rate averaged 21.3 million cubic feet of gas per day,
or 3.6 MMcf per day per frac stage. The ultimate recovery from the D-34-K well
is estimated to be 18 billion cubic feet of gas. "We believe this is the most
prolific shale gas resource test in the world," Farris said.

As part of this transaction, Apache will sell to Chevron a 50 percent interest
in its 100 percent-owned undeveloped Liard and Horn River acreage for  $550
million. Apache will pay Chevron to equalize interests in other Horn River
acreage owned by Apache, Encana and EOG. Apache also will pay Chevron to
increase Apache's ownership of the LNG plant and pipeline projects to 50
percent. Apache's net proceeds are expected to be approximately  $400 million.
The transaction, which is subject to certain government approvals, is expected
to close in the first quarter of 2013.

As is customary in LNG projects, Apache and Chevron will explore sales of equity
interests in the plant and upstream assets to foundation customers.  

Kitimat LNG, at Bish Cove on the northern  British Columbia  coast approximately
400 miles (650 km) north of  Vancouver, is currently completing front-end
engineering and design, and early site work is under way. Current plans call for
two liquefaction trains, each with expected capacity of 5 million tons of LNG
per annum (about 750 million cubic feet of gas per day).  Kitimat  has received
all significant environmental approvals and a 20-year export license from the
Canadian federal government.

The 290-mile (463-km) Pacific Trail Pipeline will provide a direct connection
between the Spectra Energy Transmission pipeline system and the Kitimat LNG
terminal.  The project has strong support from many of the First Nations along
the route.  

"We want to thank and acknowledge EOG and Encana for their contribution to the
development of the  Kitimat  project," Farris said. "We appreciate the hard work
of many employees and contractors to advance the project to this stage and the
strong support the plant and pipeline projects have received from local
communities, provincial and federal officials and the Haisla and other First
Nations.

"Construction of the plant and pipeline will have a significant economic impact,
and the operational phase will provide opportunities for employment as well as
royalties and tax revenues for the Federal, Provincial and local governments for
many years," he said. "Chevron and Apache will continue to develop this project
in a safe and environmentally responsible manner."

RBC Capital Markets was advisor to Apache, EOG and Encana in the sale
preparation of portions of their Horn River Basin holdings.

About Apache

Apache Corporation is an oil and gas exploration and production company with
operations in  the United States,  Canada,  Egypt, the United Kingdom North Sea,
 Australia  and  Argentina. Apache posts announcements, operational updates,
investor information and copies of all press releases on its website, 
www.apachecorp.com.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934.  Forward-looking statements can be identified by words
such as "anticipates," "intends," "plans," "seeks," "believes," "estimates,"
"expects" and similar references to future periods.  These include statements
about schedules, costs and government approvals of development of the Kitimat
LNG project and Pacific Trail Pipelines, LNG marketing activities and future
production and exploration prospects in Western Canada.  While forward-looking
statements are based on assumptions and analyses made by us that we believe to
be reasonable under the circumstances, whether actual results and developments
will meet our expectations and predictions depend on a number of risks and
uncertainties which could cause our actual results, performance, and financial
condition to differ materially from our expectations.  See "Risk Factors" in our
2011 Form 10-K filed with the Securities and Exchange Commission for a
discussion of risk factors that affect our business.  Any forward-looking
statement made by us in this news release speaks only as of the date on which it
is made.  Factors or events that could cause our actual results to differ may
emerge from time to time, and it is not possible for us to predict all of them. 
We undertake no obligation to publicly update any forward-looking statement,
whether as a result of new information, future development or otherwise, except
as may be required by law.

Cautionary Note to Investors

The United States Securities and Exchange Commission ("SEC") permits oil and gas
companies, in their filings with the SEC, to disclose only proved, probable, and
possible reserves that meet the SEC's definitions for such terms. Apache uses
certain terms in this release, such as "resource potential," "resource," and
other similar terms that the SEC guidelines strictly prohibit Apache from
including in filings with the SEC.  Such terms do not take into account the
certainty of resource recovery, which is contingent on exploration success,
technical improvements in drilling access, commerciality and other factors, and
are therefore not indicative of expected future resource recovery and should not
be relied upon. Investors are urged to consider carefully the disclosure in
Apache's Annual Report on Form 10-K for the fiscal year ended  December 31,
2011, and amendments thereto, available from Apache at  www.apachecorp.com  or
by writing Apache at: 2000 Post Oak Blvd., Suite 100,  Houston, Texas  77056
(Attn: Corporate Secretary). You can also obtain this report from the SEC by
calling 1-800-SEC-0330 or from the SEC's website at  www.sec.gov.

APA-CA

SOURCE  Apache Corporation


Media: Bill Mintz, Office: (713) 296-7276; mobile: (713) 392-3406, Bob Dye,
Office: (713) 296-6662; mobile: (832) 867-8104, John Roper, Office: (281)
302-2646; mobile: (832) 312-3914, Paul Wyke (Calgary), Office: (403) 303-5925;
mobile: (403) 620-0573, Investors: Brady Parish, (713) 296-6472, Castlen
Kennedy, (713) 296-7189
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.