HOUSTON, Aug. 29, 2013 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) and Sinopec International Petroleum Exploration and Production Corporation today announced they have launched a global strategic partnership to pursue joint upstream oil and gas projects. As the first step in this partnership, Apache will receive $3.1 billion in cash, subject to customary closing adjustments, in exchange for Sinopec gaining a 33 percent minority participation in Apache's Egypt oil and gas business. Apache will continue to operate its Egypt upstream oil and gas business.
The Apache-Sinopec partnership G. Steven Farris, chairman and chief executive officer of Apache, said: "We are pleased to launch a global partnership with Sinopec, and to welcome them into our business in Egypt. Their technical expertise complements our 20 years of experience operating in Egypt and creates an alliance that will continue to explore and deliver the tremendous hydrocarbon resources in the Western Desert. Sinopec is an ideal partner for us, and we look forward to the growth and value generation ahead for both companies through the expansion of our collaboration to other projects."
Given the sustained growth of its operations in Egypt, Apache has conducted an extended evaluation of a strategic partnership to ensure its ability to continue to deliver growth opportunities there while enhancing Apache's portfolio balance. The partnership announced today results from several months of joint efforts between Apache and Sinopec.
The Egypt partnership is subject to customary governmental approvals and is expected to close during the fourth quarter, with an effective date of January 1, 2013.Portfolio rebalancing progressApache continues to rebalance its portfolio toward assets with predictable growth rates and attractive rates of return. Pro forma for the partnership with Sinopec and the sale of Gulf of Mexico shelf assets, Apache's second-quarter 2013 production from North American onshore assets and from Egypt would have comprised approximately 55 percent and 15 percent, respectively. In 2010, onshore North America contributed 31 percent of Apache's overall production, Egypt represented 25 percent and the Gulf of Mexico shelf represented 17 percent. "Our successful exploration and development programs in Egypt have been an important contributor to both growth and cash flow for many years. With today's partnership, we are ensuring they can continue this contribution in the future," Farris said. "At the same time, we are taking meaningful steps to rebalance our portfolio to better deliver the full potential of our deep North America onshore resource inventory." As part of its portfolio rebalancing process, Apache has set out several capital allocation priorities with respect to the use of proceeds from strategic steps. As previously announced, the company intends to pay down debt in order to maintain its current credit ratings and buy back shares under a 30-million share repurchase authorization, as well as fund future capital expenditures including international projects.