Apache, KUFPEC and KOGAS Sign LNG Sales and Equity Agreements for Wheatstone Project in Western Australia

HOUSTON, July 19 /PRNewswire-FirstCall/ -- Apache Corporation (NYSE, Nasdaq: APA) today announced that its subsidiary – together with a subsidiary of Kuwait Foreign Petroleum Exploration Co. k.s.c. (KUFPEC) – has  signed Heads of Agreement (HoAs) for the purchase of liquefied natural gas (LNG) from the Wheatstone LNG project in Australia and an equity stake in the project by Korea Gas Corporation (KOGAS).

• KOGAS expects to purchase 1.5 million tons per annum (mtpa) of LNG from Apache, KUFPEC and two Chevron Corp. subsidiaries for up to 20 years. Approximately 25 percent of the LNG is expected to be purchased from Apache and KUFPEC, with the remainder from Chevron, Wheatstone's operator.
• Under the equity HoA and a related transaction with Chevron, KOGAS intends to acquire a 5-percent interest in the entire Wheatstone Project, comprising 5-percent interests in: Apache's and KUFPEC's offshore license WA-356-P, which contains the Julimar and Brunello fields; Chevron's Wheatstone field licenses; and the Wheatstone project facilities.

Including its equity participation and purchases from Apache, KUFPEC and Chevron, KOGAS expects to take delivery of a total of 1.95 mtpa of LNG from the Wheatstone project. Apache's share of the sales agreement with KOGAS is expected to be approximately 240,000 tons of LNG per year or 32 million cubic feet (MMcf) of natural gas per day.

Financial terms of the LNG sales and equity HoAs were not disclosed.

"Apache looks forward to working with KOGAS – the largest single LNG buyer in the world – as a project participant and LNG customer," said G. Steven Farris, Apache's chairman and chief executive officer. "These Heads of Agreement represent milestones in monetizing the Julimar and Brunello discoveries at prices linked to world oil prices and for Apache's participation as a foundation partner at Wheatstone; they also strengthen our role as a reliable future supplier of LNG."

Pending completion of final agreements with KOGAS, Apache owns a 65-percent interest in Julimar and Brunello, two of the company's largest discoveries; KUFPEC owns the remaining share.

Before the expected sell-down to KOGAS, Apache projected net sales at Wheatstone of approximately 190 MMcf of gas and 5,100 barrels of condensate per day with a 15-year production plateau.

In October 2009, Apache Julimar Pty Ltd, an Apache subsidiary, assumed a 16.25-percent equity interest in the Wheatstone project, and KUFPEC Australia (Julimar) Pty Ltd, a KUFPEC subsidiary, assumed an 8.75 percent interest in the project. These equity interests will be reduced as a consequence of KOGAS' participation.  Chevron is responsible for marketing LNG from the Wheatstone Project.

The LNG facility's first phase will consist of two processing trains with a combined capacity of approximately 8.6 mtpa. It will be located at Ashburton North on the mainland of Western Australia. A final investment decision on the first phase of the project is slated for 2011, after front-end engineering and design is completed.

Apache and KUFPEC will develop facilities to supply gas from their Julimar and Brunello discoveries to Wheatstone. Apache will operate the design and construction phases of this part of the project.

Apache Corporation is a large oil and gas independent with operations in the United States, Canada, the United Kingdom sector of the North Sea, Egypt, Australia and Argentina.

This news release contains certain "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 including, without limitation, expectations, beliefs, plans and objectives regarding production and exploration activities. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties, including, without limitation, risks, uncertainties and other factors discussed in our most recently filed Annual Report on Form 10-K, on our Web site, www.apachecorp.com, and in our other public filings and press releases. There is no assurance that Apache's expectations will be realized, and actual results may differ materially from those expressed in the forward-looking statements. We assume no duty to update these statements as of any future date.

APA-AU

SOURCE Apache Corporation

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