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North Sea Region Investor Update – Apache Corp

Apache Corp · Nov 17, 2015 · 57 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. North Sea Region Investor Update – Apache Corp – slide 1
    11.17.2015
  2. North Sea Region Investor Update – Apache Corp – slide 2
    AGENDA I. Overview: John Christmann, CEO & President II. North Sea Asset Review: Cory Loegering, Region VP and Managing Director North Sea III. Financial Considerations: Gary Clark, VP Investor Relations IV. Key Takeaways: John…
  3. North Sea Region Investor Update – Apache Corp – slide 3
    OVERVIEW JOHN CHRISTMANN, CHIEF EXECUTIVE OFFICER & PRESIDENT 3
  4. North Sea Region Investor Update – Apache Corp – slide 4
    APACHE TODAY Realigned the organization and streamlined the portfolio Significantly strengthened the balance sheet Aligned activity and capital spend for current price environment Aggressively reducing all facets of the cost…
  5. North Sea Region Investor Update – Apache Corp – slide 5
    NORTH SEA IS IMPORTANT TO APACHE Theme Contribution Diversification: short, medium and North Sea provides balance to long-cycle projects our portfolio Competitive, high rates of return High netbacks per Boe North Sea generates…
  6. North Sea Region Investor Update – Apache Corp – slide 6
    APACHE NORTH SEA IS HIGHLY DIFFERENTIATED Two of the most prolific North Sea hydrocarbon accumulations at Forties and Beryl Significant prior infrastructure investment Best-in-class production efficiency Advantaged pipeline and…
  7. North Sea Region Investor Update – Apache Corp – slide 7
    INDUSTRY LEADER IN PRODUCTION EFFICIENCY APACHE 90% PRODUCTION EFFICIENCY VS. 95% OPERATOR AVERAGE OF 65% 90% APA Operating Efficiency UKCS Avg. Operating Efficiency 85% 80% Apache Enters U.K. North Sea 75% 70% 65% UKCS…
  8. North Sea Region Investor Update – Apache Corp – slide 8
    ADVANTAGED INFRASTRUCTURE LOCATION Apache North Sea not dependent on third-party facilities Direct to Tanker 91% Uptime Direct to Terminal 93% Uptime 8
  9. North Sea Region Investor Update – Apache Corp – slide 9
    50% OPERATING COST ADVANTAGE Unit Operating Cost (/Boe) 35 Apache UK North Sea Avg 30.49 30 27.07 25 22.19 20 17.64 16.66 13.76 14.74 15 13.46 13.62 11.49 10.37 10 8.03 7.02 5 0 2009 2010 2011 2012 2013 2014…
  10. North Sea Region Investor Update – Apache Corp – slide 10
    BENEFIT OF HIGHER PRODUCTION EFFICIENCY AND LOWER OPERATING COSTS Boe/d 1,400 Example U.K. North Sea Well Apache NPV10: 7.6 MM, ROR: 48% 92% Efficiency 14/Boe Operating Costs UK North Sea Avg. - NPV10: 0.3 MM, ROR: 11% 0…
  11. North Sea Region Investor Update – Apache Corp – slide 11
    MORE DOLLARS WILL GO TOWARD DRILLING 2012 2015 Capital(1) 2016 2020 Capital(1,2) Seismic and Infrastructure Dummy Data Exploration 12% 10% Drilling and Infrastructure Completion Drilling and 44% 51% Completion 78%…
  12. North Sea Region Investor Update – Apache Corp – slide 12
    NORTH SEA OUTLOOK: NEXT 5 YEARS Brent Prices: 2012-2015 Historical average: 107 2016-2020 Consensus 5-year average: 67 in millions MBoe/d in millions 900 80 500 400 60 600 300 40 200 300 20 100 0 0 0 Avg. Annual…
  13. North Sea Region Investor Update – Apache Corp – slide 13
    NORTH SEA ASSET REVIEW CORY LOEGERING, REGION VP AND MANAGING DIRECTOR NORTH SEA 13
  14. North Sea Region Investor Update – Apache Corp – slide 14
    NORTH SEA HIGHLIGHTS Apache has a very advantaged position Top-tier assets Most efficient operator High rates of return Strong free cash flow generation Significant upside ahead Unrisked drilling inventory with 4x to 7x net…
  15. North Sea Region Investor Update – Apache Corp – slide 15
    SECOND-LARGEST U.K. NORTH SEA OIL PRODUCER MBBLS/D Top U.K. North Sea Oil Producers 100 90 80 70 60 50 40 30 20 10 0 Source: WoodMac UK Net entitlement production - 2014 UK 15
  16. North Sea Region Investor Update – Apache Corp – slide 16
    FORTIES Largest oil field in the U.K. North Sea Forties Field Overlaid On Map of Houston Acquired in April 2003 from BP for 630 million Field is one large 4-way structural closure 15 miles Apache has invested 2.3 billion in…
  17. North Sea Region Investor Update – Apache Corp – slide 17
    FORTIES Most resilient field in the North Sea Mbo/d 160 140 2003 2003: Apache acquired 120 Forties field, the 10th 100 80 largest oil producer in 60 the U.K. North Sea 40 20 0 Mbo/d 2014: 2nd largest oil 160 2014…
  18. North Sea Region Investor Update – Apache Corp – slide 18
    FORTIES Exceptional field revival Gross Mboe/d Apache invested 1 1000 billion in infrastructure Apache acquires Forties from BP during the first 5 years Increased efficiency 100 and stabilized production with the Satellite…
  19. North Sea Region Investor Update – Apache Corp – slide 19
    FORTIES Exceptional field revival Years Until Net Production Net Proved Reserves Decommission Date Mboe/d MMBoe Years 46 350 18 45 5+ MBoe/d 235 MMBoe 16 Extended 300 Decommission 16 Added 45 Produced 2003-2014 14 Date 18+ Years…
  20. North Sea Region Investor Update – Apache Corp – slide 20
    FORTIES Acquired inventory - 2003 38 targets identified at time of acquisition Bravo Alpha Charlie FASP Delta Echo Identified targets 20
  21. North Sea Region Investor Update – Apache Corp – slide 21
    FORTIES Wells drilled since acquisition 32 initial targets drilled - 74% success rate 134 Apache identified targets drilled - 75% success rate Bravo Alpha Charlie FASP Delta Echo Identified targets at acquisition…
  22. North Sea Region Investor Update – Apache Corp – slide 22
    FORTIES Substantial low-risk inventory remaining 84 targets currently identified 2016 seismic will increase the count Bravo Alpha Charlie FASP Delta Echo All targets drilled by Apache Remaining targets 22
  23. North Sea Region Investor Update – Apache Corp – slide 23
    FORTIES Significant reserves remain Giant field: 5 billion barrels of original oil in place 2.6 billion barrels recovered to date (52% Rf) Each 1% additional recovery is 50 million barrels 4D seismic shoots and increased water…
  24. North Sea Region Investor Update – Apache Corp – slide 24
    FORTIES Development location type curve Boe/d 5-Year Production Curve (PMean) 1,400 1,200 1,000 800 100% rate of return 600 400 200 - 0 5 10 15 20 25 30 35 40 45 50 55 60 Month Current 30-Day Average ATAX NPV Locations…
  25. North Sea Region Investor Update – Apache Corp – slide 25
    FORTIES An Apache success story Since 2003, Apache has: Generated 18.4 billion in revenue Invested 10.2 billion (capital and operating costs) Delivered 1.5 billion of cumulative free cash flow Realized an estimated 27% rate of…
  26. North Sea Region Investor Update – Apache Corp – slide 26
    BERYL AREA Significant growth potential Beryl Area Recent Well Results Acquired in January 2012 BCE: 30-Day IP 6916 Boe/d from ExxonMobil for 1.44 BDE: 30-Day IP 1071 Boe/d billion L4S: 30-Day IP 9679 Boe/d BLA: 30-Day IP 1670…
  27. North Sea Region Investor Update – Apache Corp – slide 27
    BERYL AREA Resource-rich embayment Traps formed by complex faulting Multiple reservoirs and seals provide multiple stacked pay Beryl opportunities WEST EAST Nevis Ness OLIGOCENE Lark EOCENE Horda Frigg Buckland…
  28. North Sea Region Investor Update – Apache Corp – slide 28
    BERYL AREA Seismic driving Apaches success Greatly improved imaging has helped to identify and de-risk a large portfolio of exploration and development prospects Legacy 1990s 3D 2013 3D seismic 28
  29. North Sea Region Investor Update – Apache Corp – slide 29
    BERYL AREA Ready for take-off Years Until Net Production Net Proved Reserves Decommission Date MBoe/d MMBoe Years 30 80 25 MMBoe 18 Produced 70 16 Extended 25 Decommission 14 Date 9+ Years 60 20 22 12 21 50 68 10 15 40 8 30…
  30. North Sea Region Investor Update – Apache Corp – slide 30
    BERYL AREA Acquired targets 2012 11 targets at time of acquisition Targets at acquisition Platforms 30
  31. North Sea Region Investor Update – Apache Corp – slide 31
    BERYL AREA Wells drilled since acquisition 21 targets drilled to date Apache drilled targets Targets at Acquisition Platforms 31
  32. North Sea Region Investor Update – Apache Corp – slide 32
    BERYL AREA New 3D seismic generated 8x inventory increase 81 targets remaining Apache drilled targets Remaining targets Platforms 32
  33. North Sea Region Investor Update – Apache Corp – slide 33
    BERYL AREA Substantial reserve upside Net Mean Unrisked Reserve (MMBoe) 45.0 40.0 350 600 35.0 Net MMBoe Unrisked net reserve potential 30.0 25.0 20.0 15.0 10.0 Development Exploration 5.0 0.0 33
  34. North Sea Region Investor Update – Apache Corp – slide 34
    BERYL AREA K discovery (Callater) Jurassic 9/19-18 9/19-18Z 9/19-18X Empire State Building 1 km Net Reserves(1) 25 - 50 MMBoe Pay proven in 3 fault blocks Net Unrisked Capital 318 million One remaining undrilled block…
  35. North Sea Region Investor Update – Apache Corp – slide 35
    BERYL AREA Storr prospect Jurassic Storr SHL 1 km Net Reserves(1) 8 21 MMBoe Highly faulted relay ramp Net Unrisked Capital 172 million Stacked objectives Working Interest 55% On trend with Skene Field Oil % / Gas % 49% /…
  36. North Sea Region Investor Update – Apache Corp – slide 36
    BERYL AREA Kinord prospect Jurassic EAST KINORD WEST Stacked objectives, Jurassic and Triassic, SHETLAND PLATFORM in each of the two identified fault blocks KINORD EAST BERYL High-risk, high-reward target BRAVO Mid 2016 test NEVIS…
  37. North Sea Region Investor Update – Apache Corp – slide 37
    BERYL AREA Tertiary injectite portfolio 100,000 acres covering the Tertiary play Apache has high working interest Titan Prospect across the play Identified multiple drillable prospects in Beryl Area with 189 400 MMBoe net…
  38. North Sea Region Investor Update – Apache Corp – slide 38
    BERYL AREA Tertiary play concept Eocene aged sedimentary injectites forming complex stratigraphic traps Injectite Geometries Remobilization of sands form PGS 2013 MC3D GeoStreamer Parent sands complex reservoir geometries…
  39. North Sea Region Investor Update – Apache Corp – slide 39
    BERYL AREA Corona discovery tertiary injectite Discovery Appraisal Beryl Buckland gas-oil contact 100 feet Skene Corona oil-water contact development acreage exploration acreage Net Reserves(1) 9 - 19 MMBoe 225 feet…
  40. North Sea Region Investor Update – Apache Corp – slide 40
    BERYL AREA Titan prospect, next tertiary injectite test Titan Titan Supported by seismic DHI Water Bottom amplitudes Corona discovery reduces risk profile Multiple follow-on exploration opportunities Horda 500 m Net…
  41. North Sea Region Investor Update – Apache Corp – slide 41
    BERYL AREA Existing infrastructure to accommodate future growth Beryl Alpha Current 100% Capacity Oil (Mb/d) 13 70 Gas Compression 120 250 (MMscf/d) Water Injection (Mb/d) 0 150 Power (MW) 16 60 Beryl Bravo Current 100% Capacity…
  42. North Sea Region Investor Update – Apache Corp – slide 42
    BERYL AREA SUMMARY Exceptional success in 2015: 89% success rate on 9 wells Plan 3 significant explorations tests in 2016 Relatively quick tieback with high ROR projects Unrisked net reserve potential of 350 600 MMBoe 42
  43. North Sea Region Investor Update – Apache Corp – slide 43
    OTHER HIGH IMPACT EXPLORATION Net unrisked MMBoe 180 180 410 Albion 160 Net MMBoe Val DSere Unrisked net reserve potential Vail 140 Forties 120 100 Seagull 80 60 Isabella 40 20 Komodo - A B C D E F Prospects Pmean…
  44. North Sea Region Investor Update – Apache Corp – slide 44
    SEAGULL DISCOVERY 9.3 km2 Closure 672 feet of oil over a 1,092-foot column Facility constrained flow of 8,700 Bo/d and 16 MMcfp/d Seagull 22/29-2Z 22/29-3 Chrysler Building 22/29-8y 22/29-8Y 1,092 ft oil column Net…
  45. North Sea Region Investor Update – Apache Corp – slide 45
    FINANCIAL CONSIDERATIONS GARY CLARK, VICE PRESIDENT INVESTOR RELATIONS 45
  46. North Sea Region Investor Update – Apache Corp – slide 46
    NORTH SEA RESOURCE POTENTIAL Forties Development : 84 current locations, 44 MMBoe Beryl Area Development and Exploration: 350 to 600 MMBoe Other High Impact Exploration: 180 to 410 MMBoe Total unrisked net resource potential: 574…
  47. North Sea Region Investor Update – Apache Corp – slide 47
    U.K. TAX OVERVIEW 2016 applicable tax rates Tax Rate(1) Old Tax Regime New Tax Regime Currently expensed under Taxes other than Petroleum Revenue Tax (PRT) 50% 35% income line Corporate Tax (CT) 30% 30% Income tax expense line…
  48. North Sea Region Investor Update – Apache Corp – slide 48
    EXAMPLE OF U.K. TAX CALCULATION Old Tax Regime New Tax Regime Lifting Revenue (1) 1,000 1,000 OPEX (200) (200) CAPEX (300) (300) Taxable Income for PRT 500 500 PRT Rate 50% 35% PRT (250) (175) Operating Income 250 325 Corporate…
  49. North Sea Region Investor Update – Apache Corp – slide 49
    ASSET RETIREMENT OBLIGATION (ARO) REVIEW Present value of Apache North Sea ARO is approximately 1.3 billion at Sept. 30, 2015 Tax relief from the U.K. government offsets the financial burden of this obligation Total net present…
  50. North Sea Region Investor Update – Apache Corp – slide 50
    ASSET RETIREMENT OBLIGATION REVIEW No significant ARO expenditures expected for the next 10 years In millions 1,400 1,200 1,000 800 600 400 200 0 Years 0 - 5 Years 6-10 Years 11-15 50
  51. North Sea Region Investor Update – Apache Corp – slide 51
    COMMON MODELING MISCONCEPTIONS Modeling Issue Reality As demonstrated, Apache fields can Future Apache North Sea fields are near-term sustain production and potentially proved Development reserve blow-down assets reserves for at…
  52. North Sea Region Investor Update – Apache Corp – slide 52
    KEY TAKEAWAYS JOHN CHRISTMANN CHIEF EXECUTIVE OFFICER & PRESIDENT 52
  53. North Sea Region Investor Update – Apache Corp – slide 53
    APACHE NORTH SEA IS HIGHLY DIFFERENTIATED Forties and Beryl two of the biggest and best hydrocarbon accumulations in the North Sea Extensive inventory of locations is still growing Infrastructure in excellent shape, higher…
  54. North Sea Region Investor Update – Apache Corp – slide 54
    KEY TAKEAWAYS Apaches North Sea production and reserves can economically sustain or grow over the next five years Returns in the North Sea are highly competitive with returns in Egypt and the Permian Basin Over the next five years…
  55. North Sea Region Investor Update – Apache Corp – slide 55
    QUESTIONS AND ANSWERS 55
  56. North Sea Region Investor Update – Apache Corp – slide 56
    APPENDIX 56
  57. North Sea Region Investor Update – Apache Corp – slide 57
    ECONOMIC ASSUMPTIONS Brent oil (/Bbl): all economics assume the following Bloomberg consensus pricing as of November 9, 2015 of 58, 65, and 70 for years 2016, 2017 and 2018+ respectively. Natural gas (/MMbtu): all economics assume…

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