Sinopec buys Apache's Egypt oil business for $3.1 bln
30 August 2013
Chinese oil giant Sinopec Group today agreed to buy US oil and gas producer Apache Corp's 33-per cent stake in its Egypt upstream oil and gas business for $3.1 billion.
The deal is Sinopec's biggest since it acquired Syncrude Canada from ConocoPhillips in 2010 for $4.65 billion.
The sale is part of Apache's earlier announced plan of selling certain assets in order to rebalance its portfolio. Last month, it agreed to sell its assets in the Gulf of Mexico's shelf to Fieldwood Energy for $3.75 billion. (See: Apache Corp to sell Gulf of Mexico shelf assets to Fieldwood Energy for $3.75 bn)
State-owned Sinopec and Apache have also entered into a partnership to explore joint upstream oil and gas projects.
The Texas-based company said that net production from its Egypt operations averaged 100,000 barrels of oil and 354 million cubic feet (MMcf) of natural gas per day in 2012, while gross production during the period averaged 213,000 barrels of oil and 900 MMcf of gas per day.
Apache will continue to operate its oil and gas projects in Egypt.
Its exploration and production operations are located in remote, unpopulated areas, and are not affected by the political events in the country.
Apache, will use the proceeds from the sale to reduce debt, buy back shares and fund capital spending.
Steven Farris, chairman and chief executive officer of Apache, said, "We are pleased to launch a global partnership with Sinopec, and to welcome them into our business in Egypt. Their technical expertise complements our 20 years of experience operating in Egypt and creates an alliance that will continue to explore and deliver the tremendous hydrocarbon resources in the Western Desert."
Sinopec Group, Asia's largest petroleum refiner, is one of the most aggressively acquisitive hydrocarbon company among Chinese oil firms. It executed its first deal in the US in 2012, when it invested $2.2 billion in Oklahoma-based Devon Energy in exchange for one-third of its interest in five shale gas acreages.
It had also acquired a stake in Chevron Corp's deep water Indonesian project, an Australian LNG joint venture, a $3.54-billion deal to buy 30 per cent of Galp Energia's Brazilian deep-sea oil asset and the $2.1 billion acquisition of Canada's Daylight Energy Ltd.
Sinopec has been acquiring oil and gas assets worldwide to convert itself into a global player and fuel the growing needs of the world's second-largest economy.
In 2012, it acquired a 49-per cent stake in Talisman Energy Inc's North Sea oil and gas assets, and formed a new joint venture with Canada's Talisman Energy, which gave the Chinese giant a 49 per cent stake in Talisman's UK North Sea business for $1.5 billion.