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Thursday, August 7, 2014
On August 6, Apache Corp. suffered a big blow as one of its employees was killed in an attempted carjacking. The Karama Field district manager was fatally shot when he was en route to Apache’s Qarun field in the Western Desert. Although there are few details at this time, the US firm is working with the Egyptian authorities handling the investigation.
This comes on the heels of Apache announcing that it was looking to potentially divest in its international assets or create a spin-off company. Chairman, CEO, and President G. Steven Farris said that Apache was currently “evaluating our international assets and exploring multiple opportunities including the potential for separation of some or all of them through the capital markets.” As one of the largest acreage holders in Egypt’s Western Desert, the firm has seen great returns from its Egyptian holdings; however, political instability and heightened security risks continue to play a role in operations.
Apache sold one-third of its stakes in Egypt to Sinopec for an estimated $3.1 billion which at the time was seen as a hefty discount on the stakes’ actual value. Many thought that the firm strategically kept the two-thirds share to see a recovery in Egypt’s political environment, hoping to avoid another monetary loss.
Executive VP and CFO Alfonso Leon said in an earnings conference call that Apache was evaluating a number of alternatives to maximize value for shareholders. He said, “Now, when you look at the profile, the profitability [and] the competitive position of our international businesses, each are a leader in their respective competitive space. So obviously, they have a very attractive profile for a portfolio capital markets positioning.”
However, this recent news may change that attractiveness of its Egyptian holdings. Political instability and heightened security concerns have plagued Egypt since its 2011 revolution, but this is the first time that a carjacking incident has resulted in a fatality.
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