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As Kenya prepares to pump its first crude and investors can hardly get enough of this East African hotspot, US-based Apache Corp. has announced it will be divesting its acreage there.
Apache is giving up its 50% share in Kenya’s offshore Block L8, which it is exploring along with British Tullow Oil Plc—the company whose first major find last year put Kenya on the oil map—and Australia’s Pancontinental.
Drilling in the block has showed only non-commercial quantities of gas so far, and this is Apache’s single holding in Kenya, while the company plans to focus on more lucrative opportunities elsewhere.
For Apache, it’s about global portfolio rebalancing and a shift in focus more towards its core growth assets in North America, such as the Texas Permian Basin, where it holds 1.6 million net acres, and the Oklahoma Anadarko Basin.
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The goal is to sell off non-core assets swiftly in order to pay down debt and fund North American onshore liquids drilling programs.
So far this year, Apache has raised some $7 billion in asset sales and monetizations. Globally, these sales have included assets in Egypt which went to China’s Sinopec, assets in Canada and in the Gulf of Mexico. The end result is to make Apache’s North American assets more productive and valuable.
Apache plans to spend some $4 billion of its total $10.5 billion annual capital expenditure on developing its onshore US assets, where production is already up.
This represents a shift in strategy with growing confidence in North American production, and while media questioned the timing of Apache’s announcement that it was pulling out of Kenya around the time of a terrorist attack on a shopping mall in Nairobi, the company denies any connection to this and it is unlikely that the two events are related.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com