Revenue for both companies, under a 25-year agreement, is estimated to be around US$5.5 billion.

According to Apache President, CEO and COO, G. Steven Farris, “Principal terms include supplying 300 million cubic feet of gas per day to the Egyptian market, which more than doubles our current production of 275 MMcf per day. While early production operations have commenced under another existing agreement, this GSA will provide the basis to reach the full contracted quantity during 2005.”

Currently, Apache supplies 650 MMcf per day in Egypt.

In a statement the company said, “Field development, final engineering design and tendering operations are under way to accommodate approximately 90 miles of new pipelines and other facilities that will permit the most efficient use of existing gas processing capacity located in the vicinity of the Qasr discovery.”

The field is located on Apache’s Khalda concession in the Western Desert and the company owns a 100-percent contractor interest in the Concession.

“Qasr is the most significant gas discovery in the Western Desert in the last decade and perhaps the most significant in Apache’s history. It establishes the Western Desert as an important hydrocarbon province well into the 21st Century and provides energy for Egypt’s further economic development,” said Farris.

In related news, Apache reported Q1 2004 earnings of US$348 million, a US$10 million increase from the same period last year. The rise comes on the back of a 23% increase in Apache’s daily production over the prior-year’s period and strong commodity prices.

Gross cash earnings for the quarter increased by US$92 million to US$737 million and debt-to-capitalisation ration fell 24.2% from last year’s 26.3% year end percentage.

According to Farris, “Higher production and strong commodity prices drove our record first-quarter financial results. Strong prices for oil and gas also are driving the acquisition market for producing properties continually higher.

“During the first quarter, we completed 422 wells worldwide compared to just 156 a year ago. We were active in each of our core areas, and this activity should benefit our financial results in future quarters.”

“We remain committed to long-term profitable growth; although we are always looking for acquisitions which have the potential to bring added value, in the current environment, we intend to continue our active drilling program and to be patient,” added Farris.