Apache Corporation has announced that it will complete an exit from Canada upon the closing of three recent transactions.
Apache has agreed to sell its Apache Canada Ltd. subsidiary to Paramount Resources Ltd. (TSX:POU). This includes properties located principally in the provinces of Alberta and British Columbia. In a separate transaction signed in June, Apache agreed to sell its Provost assets in Alberta to an undisclosed privately owned company. Also in June, Apache sold its assets at Midale and House Mountain, located in Saskatchewan and Alberta, to Calgary-based Cardinal Energy Ltd.
Production from Apache's Canadian operations averaged approximately 300 million ft3 of gas equivalent per day for the second-quarter 2017, of which approximately two-thirds is natural gas. Aggregate proceeds from the three transactions are approximately US$713 million (CAN$ 927 million). These proceeds, subject to foreign exchange movement and customary closing adjustments, will be used to fund a portion of Apache's 2017 - 2018 capital programme, to reduce debt, or to improve overall liquidity.
"Today's announcement is consistent with Apache's objective of streamlining our portfolio and focusing on assets in the United States, United Kingdom North Sea and Egypt. This strategic decision will enhance the company's resource allocation to its primary growth areas, particularly within the Permian Basin," said John J. Christmann IV, Apache's chief executive officer and president.
Upon completion of its exit from Canada, Apache will realise a significant reduction in asset retirement obligations and annual overhead costs. Total company revenues per BOE, cash margins per BOE, and earnings per share will also improve with the completion of these transactions. Apache budgeted US$125 million of capital expenditures to Canada for 2017 and 2018. Unspent allocations will be redirected to other areas of the portfolio. The company plans to update its 2017 and 2018 guidance following the closings of the three transactions. The Cardinal transaction closed in late June, and the remaining two are expected to close by the end of August 2017.
"Apache has had a long-standing presence in Canada, and I want to extend my sincere gratitude to all employees associated with our Canadian operations. Your efforts and hard work over the years helped grow our Canadian business into one of the largest in the region. We are grateful for your commitment to excellence and responsible development.
"With our decision to exit Canada, Apache's resulting global portfolio is more streamlined and our resources more focused. Our strong positions and enhanced focus in our core areas will drive improvements to overall returns on capital invested going forward," Christmann said.
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