New PSC Terms Will Drive Increased Investment and Production

Highlights

• 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.

APA Corporation has 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.”

KeyFacts Energy: APA Egypt country profile