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Egypt PSC Modernization – APA Corp.

APA Corp. · Dec 27, 2021 · 18 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. Egypt PSC Modernization – APA Corp. – slide 1
    Egypt PSC Modernization
  2. Egypt PSC Modernization – APA Corp. – slide 2
    Delivering on Egypts Vision for Modernization Benefits of Modernized PSC Agreement and Long-Term Partnership Aligns APAs investment priorities with Egypts oil growth objectives Promotes efficient development of highly economic…
  3. Egypt PSC Modernization – APA Corp. – slide 3
    Modernization Executive Summary Effective date of April 1, 2021 Returns Egypt program to APAs most economic investment opportunity o Increasing to 15 drilling rigs in 2022 90% of gross production in a single, simplified PSC…
  4. Egypt PSC Modernization – APA Corp. – slide 4
    Near-Term Impacts of Modernization 2022 plan to double average drilling rig count & increase well completions by 3x compared with 2021 Gross oil production forecasted to increase 13 15% in 2022 APA / Sinopec Free Cash Flow(1) of…
  5. Egypt PSC Modernization – APA Corp. – slide 5
    Background & Need For Modernization PSC discussions began over 2 years ago Integrated effort aligned with Ministry of Petroleums vision for Modernization Signed by authority of the President of Egypt on December 26, 2021 Why it was…
  6. Egypt PSC Modernization – APA Corp. – slide 6
    Egypt Production Sharing Contract (PSC) Overview Basic structure of PSC Grants Contractor the right to explore and produce petroleum from a defined concession area Contractor incurs all costs & exploration risk Approved costs are…
  7. Egypt PSC Modernization – APA Corp. – slide 7
    Production Allocation Under Previous PSCs Varied from Varied from 60 75% GROSS 25 40% PRODUCTION PROFIT SHARE CONTRACTOR COST RECOVERY Some ECR OPEX (100% QTRLY) Varied from Varied from shared 70 80% 20 30% CAPEX (QTRLY OVER 4…
  8. Egypt PSC Modernization – APA Corp. – slide 8
    Production Allocation Under Modernized PSC Fixed at Fixed at 60% GROSS 40% PRODUCTION PROFIT SHARE CONTRACTOR COST RECOVERY 100% of ECR OPEX (100% QTRLY) Fixed at Fixed at shared 70% 30% CAPEX (QTRLY OVER 4 YRS) ratably…
  9. Egypt PSC Modernization – APA Corp. – slide 9
    Modernized PSC Simplifies & Improves Production Allocation Nearly all in-country costs are eligible for recovery(1) Single cost pool provides access to formerly trapped costs 1 How Cost Recovery Improves Single cost pool will also…
  10. Egypt PSC Modernization – APA Corp. – slide 10
    How Backlog Recovery Improves Nearly 900 million in unrecovered costs as of the effective date of Modernized PSC Revenue not sufficient in some concessions to enable full cost recovery under prior PSC Previously backlogged costs will…
  11. Egypt PSC Modernization – APA Corp. – slide 11
    Egypt Oil Production Returning to a Growth Trajectory Oil Oil Production (Mbo/d) Production (Mbo/d) Anticipate significant increase in long- 200 term oil production from 15-rig program 150 Gross gas production expected to…
  12. Egypt PSC Modernization – APA Corp. – slide 12
    Proforma Impact on 2021 / Looking Ahead to 2022 2022 72 2021 72 Brent Brent Previous Modernized APA / Sinopec JV Terms Terms Modernized Terms Gross Volume (Mboe/d) 232 - 234 250 - 255 Reported Volume(1) (Mboe/d) 114 141 158…
  13. Egypt PSC Modernization – APA Corp. – slide 13
    Egypt is a Core Contributor to APAs Portfolio Largest oil producer and onshore acreage holder Strong track record of resource discovery & efficient development since 1994 PSC modernization creates win-win relationship for next 20…
  14. Egypt PSC Modernization – APA Corp. – slide 14
    Appendix 15
  15. Egypt PSC Modernization – APA Corp. – slide 15
    Significant Activity Increase Underway Across 5 Million Acre Footprint Cairo 2020 2021 2022E Drilling Rig count 7 7 14 Workover Rig count 14 10 15 Well spuds 62 70 145 Modernization unlocks previously underinvested areas…
  16. Egypt PSC Modernization – APA Corp. – slide 16
    Representative Example of Excess Cost Recovery & Backlog Scenarios Excess Cost Recovery Scenario (High Oil Price) Backlog Scenario (Low Oil Price) Total Total Profit Revenues Cost Recovery Profit Revenues Cost Recovery Share (60%)…
  17. Egypt PSC Modernization – APA Corp. – slide 17
    Glossary of Terms Contractor: an oil company party to a PSC and when used in the context of the new APA PSC, a subsidiary of Egypt Joint Venture LP owned 2/3 by Apache Corporation (APA) and 1/3 by Sinopec Cost Recovery Share: volume…
  18. Egypt PSC Modernization – APA Corp. – slide 18

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