APA Corp Announces Ratification of Modernized Production Sharing Contract in Egypt

Tuesday, January 4, 2022

New PSC Terms Will Drive Increased Investment and Production

Key Takeaways

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.

« GO BACK

Petroleum Africa

APA Corp Announces Ratification of Modernized Production Sharing Contract in Egypt

Petroleum Africa On-The-Go

APA Corp Announces Ratification of Modernized Production Sharing Contract in Egypt

You may also like

First LNG Realized at the Greater Tortue Ahmeyim Project

United Energy Acquires Western Desert Producer APEX

Baker Hughes Announces Major Gas Technology Orders for Venture Global LNG

ReconAfrica: Naingopo Results Demonstrate a Working Petroleum System

Tullow Highlights 2025 Operational Plans in Ghana

TotalEnergies to Supply 1.5 TWh to STMicroelectronics in France Over 15 years

Rockhopper Reaches Final Settlement with United on Egypt’s Abu Sennan Concession

Oil & Gas Crucial for African Growth: AEC Calls for Industry Support to Defend African Market

Petroleum Africa On-The-Go