Petroleum Africa
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Monday, September 2, 2013
One US independent mainstay in Egypt has sold off 33% of its operations in the beleaguered North African country. Apache Corp., one of the country’s top producing firms entered into a deal with China’s Sinopec that has the Chinese firm picking up 33% of Apache’s operations for $3.1 billion.
Net production from Apache’s Egypt operations averaged 100,000 barrels of oil and 354 Mmcf/d of natural gas in 2012. Gross production during the period averaged 213,000 barrels of oil and 900 Mmcf/d of gas.
The sale was billed under a “global” strategic partnership but the fact that it featured Egyptian assets is telling. The country’s security situation has been worsening over the past few months, and while this has not affected Apache’s operations it has affected the company’s share price. In mid-August the company saw its share price drop on what analysts attribute to the situation in Egypt. The country accounts for an estimated 20% of Apache’s production levels and about 25% of its cash flow, which considering the political and civil unrest gave the company’s investors pause.
The deal seemed to have calmed investor nerves as following the deal announcement Apache’s shares were back on the rise. The deal could also signal the go ahead for other US firms to partially or fully exit their assets in the volatile MENA region. Occidental Petroleum sees about 37% of its production come out of the region and there has been talk that the company is looking to sell off these assets if the price is right. Another US firm possibly looking for an exit plan is Marathon Oil; in July it was rumored that the US independent was mulling a possible exit from Libya.
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