EnerCom The Oil & Gas Conference 2021 Gary T. Clark, CFA AUGUST 16, 2021
Notice to Investors Certain statements in this presentation contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 including, without…
Agenda Energy Sector Performance APA Overview Relative Valuation Considerations 3
Energy Sector: Historically Low Representation in S&P 500 S&P 500 Index Weightings Tech WTI /Bbl Bubble 60% 180 52.5% 50.6% 50% 150 40% 120 30% 90 20% 60 10% 30 2.6% 5.5% -- 0 WTI S&P Energy S&P Info Tech + Comm Svcs +…
Post Tech Bubble: A Decade of Massive Energy Outperformance 250% 200% 150% 100% 102.1% 50% -- (50%) (46.7%) (100%) Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 S&P Energy S&P Info Tech…
E&P Sector Punching Above Its Weight Class 7
Big Tech: To Whom Much is Given, Much Should Be Required 8
APA Overview US Egypt North Sea Suriname 9
APAs Response to Pandemic-Related Volatility Actions Relative Capital Investment and Production Impact Temporarily suspended U.S. drilling and reduced activity in Egypt & North Sea (13%) Deepened cost cutting efforts - more than…
United States Currently running 2 rigs in Permian Basin Permian Basin Acreage Central Basin Platform Strong performance from 2021 Permian completions May add 3rd rig in Permian, Alpine High, or Austin Chalk Southern Midland…
Egypt Apache Egypt Acreage: 5.2 million acres Countrys largest oil producer and acreage holder Deep, high-quality inventory Running 8 rigs: Gross production to begin trending Apache up in 2H21 25 Miles REPORTED GROSS…
North Sea Apache North Sea Acreage Maintaining 1 floating rig & 1 platform crew Apache Beryl Activity set can sustain production in 55 to 60 Mboe/d range for several years Forties Planned and unplanned operational downtime…
Suriname Block 58 (APA 50% WI): World Class Opportunity o 4 Discoveries since Jan. 2020, appraisal drilling underway o Recent successful appraisal result at Sapakara South-1, flow test planned Keskesi South-1 appraisal well…
APAs Free Cash Flow Potential (Ex-Suriname) APA Estimates Upstream-Only FCF Generation Capacity of 1.6 - 1.7 Billion Annually Key Assumptions: o 1.2 billion of annual development capital (up from 900 million in 2021E) o Global…
APA Relative Valuation Considerations 16
2021 Multiple Comparison Price to Earnings (P/E) Ratio Price to Cash Flow (P/CF) Ratio 23.0x 39.7x 13.1x 5.9x 4.1x 2.3x APA Peers S&P 500 APA Peers S&P 500 Enterprise Value / EBITDA(X) Free Cash Flow Yield (FCF/Mkt. Cap)…
Changing the Markets Perception of Value: Altus Midstream Example ALTM Stock Price (July 2020 Current) In November 2020, ALTM announced its plan to initiate a 1.50 per/sh 75 quarterly dividend (implied annual yield of 60%) 70 65…
Thoughts on APA and MRO MRO APA Stock Price Performance (2021 YTD) 2Q21 Production(1) 348 Mboe/d 342 Mboe/d 120% 2021E Free Cash Flow (MM)(2) 1,913 1,993 Market Cap (MM) 9,776 7,269 100% 2Q21 Net Debt (MM)(3) 3,938 6,804 86%…
Thoughts on APA and HES HES APA Stock Price Performance (Liza Discovery Today) 2Q21 Production(1) 328 Mboe/d 342 Mboe/d 60% June17 Liza FID 2021E EBITDAX (MM)(2) 3,345 4,188 40% Market Cap (MM) 22,538 7,269 20% 2Q21 Net Debt…
APA Has Strong Current Earnings + NAV Catalyst in Suriname APA = bullish EPS upside + NAV upside Source: Sankey Research. Sunday Sankey 7/4/2021. 24
Summary E&P companies are capital disciplined, cheap and committed to returning cash APA making excellent progress on debt reduction, plan for cash return to come Robust FCF generation and visibility into many years of sustained…
Glossary of Referenced Terms & Non-GAAP Reconciliations 26
Glossary of Referenced Terms Upstream Capital Investment: Includes exploration, development, gathering, processing, and transmission capital, capitalized overhead, and settled asset retirement obligations, and excludes capitalized…
Non GAAP Reconciliation Upstream Capital Investment Reconciliation of Costs Incurred to Upstream Capital Investment Management believes the presentation of upstream capital investments is useful for investors to assess Apache's…
Non GAAP Reconciliation Net Debt Reconciliation of Debt to Net Debt Net debt, or outstanding debt obligations less cash and cash equivalents, is a non-GAAP financial measure. Management uses net debt as a measure of the Company's…
Non GAAP Reconciliation Cash Flow Before Changes in Operating Assets & Liabilities and Free Cash Flow Reconciliation of Net Cash Provided by Operating Activities to Cash Flows from Operations before Changes in Operating Assets and…
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