Apache May Sell its Interest in Wheatstone LNG Project - Analyst Blog


U.S. energy firm Apache Corp. ( APA ) is looking for buyers for its 13% stake in Western Australia based Wheatstone liquefied natural gas (LNG) project, as per media reports. The $27.0 billion worth LNG development is under construction and will likely start operating by 2016. U.S. energy major Chevron Corp. ( CVX ) will be the operator of the project.

The decision is in accordance with the Houston-based oil and gas explorer's plan to exit businesses that do not fit into its long-term growth plan. According to the media report, Apache might utilize the net proceeds to repurchase additional shares.

Last month, Apache sold its interests in deepwater Gulf of Mexico projects to an oil and gas subsidiary of the mineral explorer, Freeport-McMoRan Copper & Gold Inc. ( FCX ) for roughly $1.4 billion. This also reflects Apache's plan to get rid of non-core assets.

Apache is one of the world's leading independent energy companies engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids.

A geographically diversified reserve base, balanced exposure to natural gas and crude oil, and multi-year trends in reserve replacement and production growth are some of Apache's positives. Additionally, a strong balance sheet helps the company to capitalize on investment opportunities and strategic acquisitions, thereby expediting growth.  

However, there is limited upside potential in the stock, given Apache's sensitivity to gas/oil price volatility, its drilling results, geo-political risks and project timing delays.

In keeping with these views, Apache currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.        

Meanwhile, one can look at better-ranked players in the oil and gas exploration and production sector like EQT Corp. ( EQT ). The stock sports a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: LNG , CVX , FCX , APA , EQT



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