Current APA Stock Info

Apache Corp. (ticker: APA) announced its second quarter results and operational updates August 3rd, and reported an average production of 388,000 BOEPD. The company earned $572 million during Q2.

Apache’s North American production totaled 244,000 BOEPD—where it averaged 18 rigs, and completed 36 gross wells. The Permian assets produced 146,000 BOEPD. In the Delaware Alpine High location, Apache continued testing and mapping.

In the North Sea, Apache averaged 55,000 BOEPD of production and ran an average of four rigs during the quarter. The company’s Egypt production was 89,000 BOEPD, where it ran an average of 13 rigs during the course of the quarter.

Earlier in the second quarter, Apache agreed to the sale of its Montney and Duverney acreage in Canada for just over $700 million. The company expects to close on the sale later in August, 2017 and believes that the divestiture allows it to focus more heavily on its Permian assets.

Without giving numbers, John Christmann—president and CEO—noted that “average cash margins per BOE, earnings per share, and free cash flow will be positively impacted,” by the Canadian asset sale.

Apache’s Q2 capital investment totaled $738 million—two thirds of which was geared towards the Permian assets. The company’s amount of cash on hand grew to approximately $1.7 billion from $1.5 billion in the first quarters. It also reduced its debt by $144 million, down to $6.8 billion.

Building up in Alpine High

Alpine High—Apache’s up-and-coming asset in the Permian—was allocated $128 million of the capital expenditures. There, Apache had six rigs operating, as of the Q2 update. Following the end of Q2, the company had 11 wells, total connected to its midstream facilities.

Apache had 35 miles worth of 30-inch trunkline for gas takeaway, as well as 40 miles of smaller gathering lines, and two gas processing facilities with eight central tank batteries in the Alpine High area. The company intends to bring another gas processing facility online in August, followed by two more in September.

Apache highlighted one well producing out of the Wolfcamp that had a 30-day average initial production of over 1,000 BOEPD.

Outlook

Following the divestiture of its Canadian assets, Apache revised its 2017 production guidance to between 354,000 BOEPD and 370,000 BOEPD for Q3, 2017 and to between 379,000 BOEPD and 401,000 BOEPD for Q4, 2017.

The company has not altered its 2017 capital budget guidance of $3.1 billion because the capital that was meant to be spent in the Canadian assets is going to be spent by the time the transaction has closed.

Apache Q2, 2017 Earnings Call Q&A

Q: Can you talk about how you expect the Alpine High to produce in the northern part of the field versus the south?

John Chrismann, president and CEO: I think the good news is, is we got online early. We were scheduled to bring everything on July 1. We have some of the stuff to talk about in the second quarter, because we were able to bring things on in early May. Things are progressing really as planned. We were able to sell net to Apache 7,400 BOEs a day in the month of June.

And like I said, we’ve been bringing up the CPFs. If you look at kind of where we are today on the infrastructure, we now have 35 miles of the 30-inch trunkline in. We’ve got over 40 miles of gathering in. There are two CPFs that are operating with eight tank batteries. And then in August and September, we’ve got our third CPF coming in – coming on in August, fourth and fifth in September, as well as a connection to the south.

And so what we’ve said is, our volumes are – we’re currently producing about 60 million a day net to Apache. You’re going to see that grow to 100 by September. And you’re going to see the liquids ratio grow as well, especially as we start to bring on more NGLs. So a lot of exciting things. We only had 11 wells on in the quarter, and really five of those have been constrained. So we’re really, really just getting started.

Q: Do you have a definitive timeline as far as when we’ll get more clarity around the potential resource at Alpine High?

John Christmann: We’re ramping up most of our wells, like the wells we disclosed on the last earnings call. We cleaned them up and shut them in. Most wells have been waiting. We’ve got – as Tim said in his notes, we’ve got a lot of wells waiting on the infrastructure. Now that we have the facilities and things, it doesn’t make a lot of sense to be flaring volumes and things. And so, as we bring more things on, I think you’re going to continue to see a lot of data coming. And when we get to a point that it makes sense to talk more definitively, what we really want to do is get the processing facilities lined out, get more time behind the wells, continue with our optimization work, and at some point, we’ll come back with something very meaningful and very definitive.

But I think what we’ve continued to state is that we feel very, very good that we have more than 3,000 wet gas locations. Your best EURs would be to look at what we disclosed at Barclays almost a year ago. And now we said with the two Wolfcamp wells that are, by the way, in two different zones in the Wolfcamp, in a significant distance between those wells, we feel very confident now that we have hundreds of locations in the Wolfcamp, so – that will be oil locations. And – so we’ll come back as we get more data. We’re really just getting started with our infrastructure and being able to bring things on and produce them into ideal production situations.


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