APA Corporation APA announced that it has agreed to invest $3.5 billion in research, development and manufacturing in Egypt's Western Desert.

Egypt's parliament snapped up a deal last month to revamp and consolidate its production-sharing contracts (PSC) with the government.

Both the African country and the joint venture between APA and Sinopec SNP will benefit from this deal. The updated PSC encourages high investment and production development, thus putting Egypt on top of many attractive investment options in APA's worldwide portfolio. It also underscores the desert country's commitment to sustainable development and public-private partnerships.

According to APA, the agreement consolidates 90% of gross output into a single concession and renews existing development lease terms for the next 20 years. In Egypt, APA's joint venture with China’s one of the largest petroleum and petrochemical companies SNP intends to boost gross capital investment by $235 million in 2022, with a 13-15% rise in gross oil output year over year.

The APA-Sinopec JV will be able to recoup almost $900 million in backlog expenditures over the next five years, beginning Apr 1, 2021, on which the new agreement will be effective.

Houston, TX-based APA boosted drilling activities in Egypt from five to 11 rigs since 2021. Also, under the amended PSC, the firm expects to increase the rig count and generate significant year-over-year growth in oil output. In the future, APA plans to adopt various effective ESG initiatives connected to its emphasis areas of air, water, communities and people.

APA is one of the world's leading independent energy companies engaged in exploration, development and production of natural gas, crude oil and natural gas liquids. Geographically, the energy player’s operations are concentrated in the United States, Egypt and the North Sea of the United Kingdom. APA also holds acreage in offshore Suriname (South America) and at other international locations.

Zacks Rank & Key Picks

APA currently has a Zack Rank #3 (Hold). Investors interested in the energy  sector might look at the following stocks worth considering with a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

PDC Energy PDCE is an independent upstream operator dealing in exploration, development and production of natural gas, crude oil and natural gas liquids. PDCE, which reached its present status following the January 2020 merger with SRC Energy, is currently the second-largest producer in the Denver-Julesburg Basin. As of 2020 end, PDCE's total estimated proved reserves were 731,073 thousand barrels of oil equivalent.