U.S. energy firm Apache Corporation APA declared that it has closed the divestiture of its interest in Canada’s Kitimat LNG project to Australian oil and gas producer, Woodside Petroleum Limited.
The transaction involved the sale of the 50% stake in the Kitimat LNG development held by Apache and the associated upstream properties in the Horn River and Liard natural gas basins in British Columbia, Canada. The total proceeds from the deal were $854 million.
Apache mentioned that the sale of the LNG project is a strategic move and that it will use the proceeds from the transaction to repay debt, repurchase shares and invest in other promising assets to facilitate growth. Investors should note that the company has directed its focus toward onshore North America over the past few years through asset sales.
The Kitimat LNG project was so long held jointly by Apache and the Canadian arm of the U.S. energy giant, Chevron Corp. CVX.
Houston, TX-based Apache is one of the world's leading independent energy companies engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. Apache has a large geographically diversified reserve base and multi-year trend in reserve replacement and production growth. However, being a firm in the exploration and production industry, Apache’s profitability is expected to take a beating in this weakly priced oil and gas market.
Currently, Apache carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.
Despite the weakness in the exploration and production industry, there are better-ranked stocks like Atlas Resource Partners LP ARP and Eclipse Resources Corporation ECR. Both these stocks hold a Zacks Rank #2 (Buy).
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