Apache Sees Q3 Losses but Bigger Savings
US independent Apache Corporation reported November 4 a third-quarter loss of $4mn, or $59mn on an adjusted basis. Net cash provided by operating activities in the third quarter was $304mn and adjusted pre-tax and exploration expenses earnings (Ebitdax) were $563mn. It did not supply year-earlier figures.
“Apache made excellent progress on its cost initiatives and returned the majority of its curtailed volumes to production during the third quarter as commodity prices improved,” it said. “This generated a substantial improvement in financial results compared to the second quarter.”
It said it continued to prioritise long-term returns over growth; generating free cash flow; strengthening the balance sheet through debt reduction; and advancing a large-scale opportunity [the Kwaskasi oil discovery] in Suriname,” said CEO John Christmann. Apache is transferring operatorship there to the French major Total.
Third-quarter reported production was 445,000 barrels of oil equivalent (boe)/day. Adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 394,000 boe/d, unchanged from the second quarter.
Its global production was 47% oil, 18% natural gas liquids and 35% gas. Margins were up $10/barrel in Egypt and the North Sea (to $23/b and $20/b) respectively and up $7/b in the US. Gas comprised 35% of its global output and natural gas liquids 18%. In the US alone, gas comprises 39% and NGLs 29% of its output of 258,058 boe/d.
Third-quarter upstream capital investment totalled $141mn, nearly all of which was attributable to international operations where it is now focusing its capital investment and rig activity.
The company’s organisational redesign, launched in the fall of 2019, is delivering cost efficiencies well in excess of original expectations. The associated estimated annual run-rate cost savings is now $400mn, up 33% from the previous estimate of $300mn.
Apache has reduced its full-year 2020 upstream capital guidance to $1bn and next year it will be no more than that, based on a US benchmark crude price of $40/b and a Henry Hub natural gas price of $2.75/mn Btu. It expects stable output from the Permian and modest declines in Egypt and the North Sea.