Apache Corporation says that the Argentine province of Neuquen has agreed to extend eight federal oil and gas concessions for 10 additional years.

Since acquiring the blocks in 2006, Apache has increased gas production 25 percent to 106 million cubic feet per day and increased oil production 9 percent to 5,500 barrels per day. The province provides about half of Apache's total output in Argentina.

The concessions, which were scheduled to expire between 2015 and 2017, encompass approximately 590,000 acres (2,384 square kilometers (km2)), including exploratory areas totaling 514,000 acres (2,082 km2). In exchange for production that would have reverted to the province beginning in six years and the right to explore for 10 additional years, Apache will pay a bonus of approximately $23 million, increase the provincial royalty to 15 percent from 12 percent, and spend up to $320 million in a future work program.

"The extension of our Neuquen concessions can be compared to an acquisition in which Apache has a good understanding of the value," said Rob Johnston, region vice president. "The agreement benefits Apache by extending our reserve life and providing more time to develop the assets, and benefits the province of Neuquen by providing an immediate cash payment as well as the assurance of continued investment and employment for Neuquen residents for many years to come.

"We appreciate the well-planned and open way in which the province conducted the negotiations," Johnston said. "Next, we plan to pursue similar extensions for concessions on the island of Tierra del Fuego."

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