Apache exits Australia – sells WA oil and gas assets to private equity consortium

Image credit: www.apachecorp.com

Oil and gas company Apache Corp. has agreed to sell its Australian unit, Apache Energy Ltd, for $2.1 billion to a group of private-equity investors managed by Brookfield Asset Management Inc. and Macquarie Capital Group Ltd.

Image credit: www.apachecorp.com

The decision to exit Australia’s energy industry is seen by many as a natural and expected step in the company’s effort to refocus on US shale drilling.

According to the news release, the company will retain a 49 percent stake in the fertilizer producer Yara Pilbara Holdings Pty.

“Today’s announcement represents a notable step in Apache’s strategic portfolio repositioning.  Over the last five years, we have transitioned Apache’s primary growth engine to North America onshore through the announcement or completion of approximately$17 billion of asset purchases and $17 billion of asset sales.  Following the sale of our Australian assets, approximately 70% of Apache’s production will come from North America onshore. Our robust North American position is complemented by our North Seaand Egyptian regions, which have an extensive inventory of prospects and assets that generate free cash flow,” said John J. Christmann, IV, Chief Executive Officer and President.


Apache also sold a liquefied natural gas project and related properties in Australia this month.

The transaction is expected to close mid-year 2015 and is subject to necessary government and regulatory approvals and customary post-closing adjustments.

The consortium also confirmed the deal in a news release, revealing that the acquisition will form the foundations of a new intermediate oil and gas producer.

The business will continue to focus on developing and supporting the growth of the Western Australian domestic gas market.

Further, the consortium announced that it has already entered into a long term gas supply agreement for the initial supply of 120 terajoules per day of natural gas, commencing in 2020, with Alcoa of Australia.

“We recognise and place a high value on the partnerships that have been developed over many years with customers, the Western Australian Government and the community. A key focus of the business going forward will be to continue to develop these long term partnerships with high levels of alignment, such as has been achieved with Alcoa of Australia,” said Kate Vidgen, Executive Director, Macquarie Capital.

“The Consortium of Brookfield and Macquarie Capital have worked cohesively to bring together this exciting transaction. This portfolio provides strong underlying cash flows via its contracted domestic gas portfolio, production flexibility and a great platform for growth, organically and through market consolidation, led by the strong local management team,” said Len Chersky, Head of Private Equity for Brookfield in Australia.

Apache Australia Managing Director and CEO of the new entity, Mr Brett Darley said he was excited to lead the transformation of Apache’s Australian assets and interests.

“With a record of exploration and production excellence spanning more than two decades in Australia, our people are well placed for this important new chapter as a significant Australian oil and domestic gas company,” he said.