HOUSTON, April 22 -- Apache Corporation (NYSE, Nasdaq: APA) announced that it signed a Gas Sales Agreement (GSA) today with the Egyptian General Petroleum Corporation (EGPC) covering 2.1 trillion cubic feet (Tcf) of natural gas from the Qasr field on Apache's Khalda Concession in Egypt's Western Desert.
Total revenue to both parties under the 25-year agreement, net of estimated development and infrastructure costs, is approximately $5.5 billion. Apache owns a 100-percent contractor interest in the Khalda Concession.
"Principal terms include supplying 300 million cubic feet (MMcf) of gas per day to the Egyptian market, which more than doubles our current production of 275 MMcf per day," said G. Steven Farris, Apache president, chief executive officer and chief operating officer. "All told, Apache has a market for 650 MMcf of gas per day in Egypt.
"While early production operations have commenced under another existing agreement, this GSA will provide the basis to reach the full contracted quantity during 2005," Farris said.
"Qasr is the most significant gas discovery in the Western Desert in the last decade and perhaps the most significant in Apache's history," Farris said. "It establishes the Western Desert as an important hydrocarbon province well into the 21st Century and provides energy for Egypt's further economic development."
Field development, final engineering design and tendering operations are under way to accommodate approximately 90 miles of new pipelines and other facilities that will permit the most efficient use of existing gas processing capacity located in the vicinity of the Qasr discovery.
"The Qasr-1X discovery was completed in July 2003 after Apache logged 606 feet of net pay in a 670-foot gross hydrocarbon column. Two appraisal wells -- the Qasr-2X and Qasr-3X -- add to our confidence regarding the ultimate size of the structure," Farris said.
The Egyptian government has granted a 95-square-mile development lease.
Farris said the fourth and fifth appraisal wells on the large Qasr structure are approaching the Jurassic-age Lower Safa target to further delineate the 13,000-acre seismically defined structure.
Sixty-two feet of additional pay were logged at shallower depths of the Qasr-2X in the AEB Cretaceous sands that produce oil in the Ozoris field approximately 2.4 miles to the northeast. Apache drilled the Qasr-7X twin well to the south of the Qasr-2X to develop the AEB reservoirs. The Qasr-7X tested at an initial rate of 1,579 barrels of oil per day from 20 feet of perforations in the AEB-3D reservoir; the well currently is on production.