Apache Corporation has arranged a $350 million financing for the Van Gogh and Pyrenees oil developments offshore Western Australia. The two projects are expected to add a total of 40,000 barrels per day to Apache's worldwide net oil production over the next 18 months.

The interest rate for initial borrowing in the financing will be approximately 3.5 percent for the first six months; thereafter, interest rates will float with LIBOR. BNP Paribas and HSBC were the lead banks in the financing.

"This transaction enables Apache to advance our development inventory by funding two major projects at competitive financing rates, despite continuing turmoil in the financial markets," said G. Steven Farris, Apache's president and chief executive officer.

Apache's Van Gogh development is expected to commence production in the second quarter of 2009 and add 20,000 barrels per day to Apache's net worldwide oil output. Apache is the operator and owns 52.5 percent of the development.

First oil production from the Pyrenees development is expected in early 2010. The project also is expected to add 20,000 barrels per day to Apache's net oil production. Pyrenees, which is operated by BHP Billiton, will develop reserves in two blocks; Apache has a 28.57-percent interest in License WA-12-R and a 31.5-percent interest in WA-155-P.

The Pyrenees and Van Gogh projects are major elements of Apache's inventory of developments that is expected to fuel growth over the next four years. Apache reduced much of the commodity price risk in conjunction with the Pyrenees and Van Gogh investments by fixing a portion of U.S. cash flow by hedging a quantity of U.S. production equal to approximately two thirds of the projects' anticipated net production for the first three years. The hedges lock in prices ranging from $60 to $75 per barrel.

Tags: Apache Corporation