APA Corporation Announces Ratification of Modernized Production Sharing Contract in Egypt
- Consolidates 90% of gross production into a single concession and refreshes existing development lease terms for 20 years;
- In anticipation of the new agreement, the APA-Sinopec JV more than doubled its Egypt rig count to 11 in 2021; planning a further increase to 15 rigs in 2022;
- APA-Sinopec JV expects to increase gross capital investment by approximately $235 million in Egypt during 2022; projects a 13% to 15% year-over-year increase in Egypt gross oil production;
- Consolidated concession will have a 40% cost recovery limit and a fixed profit share rate of 30% for all APA-Sinopec JV production;
- APA-Sinopec JV will be entitled to recover nearly $900 million of backlogged costs over a five-year period starting from April 1, 2021, the effective date of the new agreement; and
- APA-Sinopec JV will pay a signature bonus payment of $100 million to EGPC.
HOUSTON, Dec. 27, 2021 (GLOBE NEWSWIRE) -- APA Corporation (Nasdaq: APA) today announced the signing, by authority of Egyptian President H.E. Abdel Fattah El Sisi, of the previously announced agreement to modernize and consolidate the company’s current Production Sharing Contracts (PSCs) with Egypt’s Ministry of Petroleum and Mineral Resources (MOP) and the Egyptian General Petroleum Corporation (EGPC). The effective date of the final agreement is retroactive to April 1, 2021 and the agreement has been formally signed by the Minister of Petroleum and Mineral Resources H.E. Tarek El Molla, EGPC and the company.
“This agreement is a win-win for Egypt and the APA-Sinopec Joint Venture. The modernized PSC incentivizes increased investment and production growth and places Egypt at the top of many attractive investment opportunities in APA’s global portfolio. It also reinforces Egypt’s commitment to responsible economic development and public-private partnerships,” said John J. Christmann IV, APA’s CEO and president. “Since the beginning of 2021, we have increased drilling activity from five to 11 rigs in Egypt, and under the revised PSC, we look forward to further increasing the rig count and generating significant year-over-year growth in oil production. Looking ahead, we will be implementing a number of impactful ESG initiatives aligned with our focus areas of air, water, communities and people.”
In a presentation posted on the Events and Presentations page at investor.apacorp.com/events-and-presentations, APA has provided additional information on the new PSC, its revised investment plans and the resulting changes to its Egypt production growth profile, and updated guidance reflecting the financial impacts of certain revised PSC terms. You can view the presentation directly here.
APA Corporation owns consolidated subsidiaries that explore for and produce oil and gas in the United States, Egypt and the United Kingdom and that explore for oil and gas offshore Suriname. The APA-Sinopec Joint Venture is the Egypt joint venture owned two-thirds by Apache Corporation and one-third by Sinopec. APA posts announcements, operational updates, investor information and press releases on its website, www.apacorp.com. Specific information concerning Suriname, ESG performance and other investor-related topics are posted at investor.apacorp.com.
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “continues,” “could,” “estimates,” “expects,” “guidance,” “may,” “might,” “outlook,” “possibly,” “potential,” “projects,” “prospects,” “should,” “will,” “would,” and similar references to future periods, but the absence of these words does not mean that a statement is not forward-looking. These statements include, but are not limited to, statements about future plans, expectations, and objectives for operations, including statements about our capital plans, drilling plans, production expectations, asset sales, and monetizations. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See “Risk Factors” in Apache Corporation’s Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on February 25, 2021, and in our quarterly reports on Form 10-Q for a discussion of risk factors that affect our business. Any forward-looking statement made by APA and/or its subsidiaries in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. APA and its subsidiaries undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future development or otherwise, except as may be required by law.
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