Apache To Sell Argentina Operations To YPF For $852 Mln

(RTTNews) - Oil and gas company Apache Corp. (APA) said Wednesday that it has agreed to sell its entire operations in Argentina to state-owned energy company YPF Sociedad Anonima (YPF) for $852 million. This includes cash payment of $800 million and the assumption of $52 million of bank debt as of June 30, 2013.

Apache noted that YPF has paid a $50 million deposit on the transaction that is expected to be completed in the next 30 days. Apache thus exits its operations in Argentina after a 13-year presence in the South American country.

Steven Farris, chairman and chief executive officer of Apache said, "Over the past year, Apache has taken decisive steps to focus its portfolio on repeatable and profitable long-term growth in areas where the company has industry-leading positions, such as its deep inventory of liquids-rich drilling opportunities onshore North America and international assets generating large free cash flows. This transaction is consistent with that strategy."

Apache noted that the transaction complements its realization of more than $7 billion of cash proceeds from asset sales in the last two quarters.

Apache will use the proceeds from the divestiture of its operations in Argentina to invest for profitable growth, enhance financial flexibility, reduce debt and buy back its common shares under a share repurchase program authorized by the board in 2013.

At year-end 2013, Apache had estimated reserves in Argentina of about 540 billion cubic feet of natural gas equivalent. During 2013, Apache's production from Argentina averaged 256 million cubic feet of gas equivalent per day.

In August 2013, Apache and China's Sinopec International Petroleum Exploration and Production Corp. said that the two companies launched a global strategic partnership to pursue joint upstream oil and gas projects.

As the first step in the partnership, Apache received $3.1 billion in cash in exchange for Sinopec gaining a 33 percent minority participation in Apache's Egypt oil and gas business. However, Apache will continue to operate its Egypt upstream oil and gas business.

In early November 2013, Apache reported an 86 percent increase in profit for the third quarter from last year, reflecting higher production from the company's North American onshore assets, higher oil prices and a tax benefit.

At that time, Apache noted that the Permian and Central regions were the main drivers of its higher production in the quarter, adding nearly 13,000 barrels per day of oil and natural gas liquids from the preceding second quarter. Apache has said it is rebalancing its portfolio toward assets with predictable growth rates and attractive rates of return.

Apache is slated to report its financial results for the fourth quarter on Thursday, February 13.

APA closed Wednesday's regular trading session at $81.28, down $0.10 or 0.12 percent on a volume of 2.32 million shares. YPF closed trading at $25.49, up $1.47 or 6.12 percent on a volume of 2.69 million shares.