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Apache Corp. Second Quarter 2020 Results

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   |    Thursday,July 30,2020

Apache Corp. announced its results for Q2 2020.

Highlights:

• On July 20, announced major discovery at Kwaskwasi, third consecutive discovery in Block 58 offshore Suriname

• Submitted appraisal plan for first discovery, Maka, in May; announced second discovery, Sapakara, in April

• Posted second-quarter reported production of 435,000 barrels of oil equivalent (BOE) per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 394,000 BOE per day

• Delivered upstream capital investment below guidance; tracking toward the low end of full-year 2020 guidance range of $1.0 to $1.2 billion

• Focused capital investments on higher-return international opportunities

• Achieved annualized cost savings target of more than $300 million, approximately $225 million of which will be realized in 2020

• Implemented operational protocols and work-from-home-processes, successfully mitigating the impact of COVID-19 on Apache’s operations, employees and communities

Apache reported a loss of $386 million or $1.02 per diluted common share during the second-quarter 2020. When adjusted for certain items that impact the comparability of results, Apache reported a second-quarter loss of $281 million, or $0.74 per share. Net cash provided by operating activities in the second quarter was $84 million, and adjusted EBITDAX was $235 million. 

John J. Christmann IV, Apache’s CEO & President, said: “Our exploration program offshore Suriname continues to deliver exciting results. Earlier today, we announced a major discovery at Kwaskwasi-1, our best well yet and third consecutive success in Block 58.

Following completion of operations at Kwaskwasi-1, a fourth exploration prospect, Keskesi East-1, will be drilled approximately 10 kilometers (6 miles) southeast of the Sapakara discovery well.

“Our continued success in Suriname, along with the steps we’ve taken to streamline our organization and further strengthen our financial position, prepare us well for the long term. Apache has achieved more than $300 million of combined, annualized LOE and overhead savings – doubling our original target – and delivered on our activity and capital reduction goal. These actions have lowered our free cash flow breakeven oil price to around $30 per barrel for the second half of 2020."

2020 Capex & Outlook

Apache delivered second-quarter upstream capital investment of $216 million and is tracking toward the lower end of its annual capital guidance range of $1.0 to $1.2 billion dollars. The company guided to third-quarter capital investment of approximately $190 million.

Q2 Ops

Second-quarter reported production was 435,000 BOE per day, and adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 394,000 BOE per day.

Following a thorough operational and economic evaluation of all producing wells, Apache chose to curtail approximately 28,000 BOE per day during the second quarter to minimize the negative cash flow impacts of lower oil and NGL prices. The company shut-in an additional 7,000 BOE per day due to unscheduled pipeline downtime at Alpine High. As prices rebounded over the past several months, the company has now returned its curtailed volumes in the North Sea and Alpine High to production, along with a portion of curtailed oil volumes elsewhere in the Permian Basin.

Christmann concluded: “Our objectives remain unchanged despite the extreme market volatility in 2020. We will budget conservatively and return free cash flow to investors, initially in the form of debt reduction; maintain a balanced and diversified portfolio; and prioritize investment for long-term returns over production growth. We will also continue to advance our exploration program and follow-on appraisal activity in Block 58 offshore Suriname and maintain our capacity to generate material free cash flow in Egypt and the North Sea."