By Sam Boughedda
Investing.com — Houston-based oil and gas firm APA Corporation (NASDAQ:APA) shares have risen 6% on the back of news that APA-Sinopec — its joint venture with Chinese partner Sinopec — will recover nearly $900 million in backlogged costs under a new drilling contract with Egypt.
The North African nation has signed the previously announced agreement to modernize and consolidate APA's current production sharing contracts with Egypt's Ministry of Petroleum and Mineral Resources and the Egyptian General Petroleum Corporation.
APA and Sinopec will collect the costs over 5 years starting April 1.
APA — previously named Apache — said the new agreement will see the joint venture further increase its rig count to 15 rigs in 2022 after more than doubling it to 11 in 2021. It will also increase production and consolidate 90% of gross output into a single concession.
The APA-Sinopec joint venture is expected to increase investment by approximately $235 million in Egypt during 2022, while it forecasts a 13% to 15% year-over-year increase in the country's gross oil production. In addition, the joint venture will also pay a signing bonus of $100 million to the Egyptian General Petroleum Corporation.
"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 Christmann, APA's CEO and president.
With Crude Oil WTI Futures up 2.5% to provide a further tailwind, APA Corp is the top performer on the S&P 500 Monday in mid-day trading.