Apache Canada Limited - a subsidiary of U.S. energy firm
) closed its previously announced deal with Chevron Canada
Limited for the development of Kitimat LNG project.
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Per the deal, the two companies will develop and operate the
Kitimat LNG project and will also build natural gas resources in
the Horn River and Liard shale-gas fields in British Columbia.
Earlier, Chevron Canada - a subsidiary of U.S. energy behemoth
) bought the respective 30% stakes owned by
EOG Resources Inc.
) in Kitimat LNG and Pacific Trail Pipelines projects.
Subsequently, Chevron Canada sold 10% of its acquired interest in
the development to Apache Canada, thereby increasing the latter's
share in the project from 40% to 50%. Chevron Canada will
assume operatorship of both the pipeline and the terminal.
In addition, Chevron Canada acquired around 110,000 net acres in
the Horn River basin from Apache Canada, EOG and Encana.
Moreover, it bought approximately 212,000 net acres of land in
the Liard Basin from Apache. Along with Apache Canada, Chevron
Canada has shared 50% operating ownership in both these projects.
The former will be the operator of the natural gas developments.
The net proceeds of Apache Canada from all these transactions
were $405 million.
Founded in 1954, Houston, Texas-based Apache Corporation 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.
We like Apache Corporation's large geographically-diversified
reserve base, as well as its balanced exposure to natural gas and
crude oil, and multiyear trends in reserve replacement and
production growth. This allows management to allocate capital and
resources to high-return projects.
However, the company's results are directly exposed to oil and
gas prices, which are inherently volatile and subject to complex
market forces. Realized prices could differ significantly from
our estimates, thereby affecting the company's revenues, earnings
and cash flow.
Apache Corporation 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.