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UNDERSTANDING EGYPT – Apache Corp

Apache Corp · Feb 26, 2014 · 16 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. UNDERSTANDING EGYPT – Apache Corp – slide 1
    UNDERSTANDING EGYPT PRODUCTION SHARING CONTRACTS AND TAX BARRELS
  2. UNDERSTANDING EGYPT – Apache Corp – slide 2
    EGYPT OVERVIEW STRONG RETURNS AND FREE CASH FLOW FROM CONSISTENT E&D PROGRAM 2013 Highlights Shushan-Khalda Matruh Gross Production 350 MBOE/D Ridge Alamein With Tax: 149 MBOE/D Net Production2 w/o Tax: 108 MBOE/D Gindi / Beni…
  3. UNDERSTANDING EGYPT – Apache Corp – slide 3
    EGYPT PRO FORMA OUTSTANDING FREE CASH FLOW GENERATION Bn 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2008 2009 2010 2011 2012 2013 2013PF CAPEX Cash Flow 4 Notes: Cash flow from operations before changes in working capital items. 2013…
  4. UNDERSTANDING EGYPT – Apache Corp – slide 4
    APACHE EGYPT COMPANIES - ORGANIZATION EGPC Apache Jointly Owned Operating Companies Khalda Qarun Apache Egypt Petroleum Petroleum Companies Company Company Matruh Shushan Faghur Alamein Ghazalat Ghindi Abu…
  5. UNDERSTANDING EGYPT – Apache Corp – slide 5
    EGYPT PRODUCTION SHARING CONTRACT (PSC) THREE MAIN PARTIES TO AGREEMENT Arab Republic of Egypt (A.R.E. or the State) Owns sovereign land / minerals Receives Income Tax from EGCP on behalf of Contractor Egypt General Petroleum…
  6. UNDERSTANDING EGYPT – Apache Corp – slide 6
    TYPICAL EGYPT DEVELOPMENT LEASE Apaches operations in Egypt are conducted pursuant to production sharing agreements in 24 separate concessions Duration 20 years oil discovery plus 5-year extension 25 years from date of first…
  7. UNDERSTANDING EGYPT – Apache Corp – slide 7
    TYPICAL EGYPT DEVELOPMENT LEASE (CONTD) Excess Cost Recovery Amount of the cost recovery pool that exceeds costs currently eligible for recovery Excess Cost Recovery flows into profit splits when shared Profit Split 20% - 30%…
  8. UNDERSTANDING EGYPT – Apache Corp – slide 8
    TYPICAL EGYPT PSC STRUCTURE Excess Cost Recovery Revenue EGPC Contractor Share Share 9
  9. UNDERSTANDING EGYPT – Apache Corp – slide 9
    ILLUSTRATIVE PSC EXAMPLE Key Assumptions Gross Oil Production 210 MBbls / d Gross Gas Production 900 MMcf / d Realized Oil Price 111 / Bbl Realized Gas Price 3.90 / Mcf Operating Costs (MM) 450 / Year GAAP DD&A (MM) 925 / Year…
  10. UNDERSTANDING EGYPT – Apache Corp – slide 10
    ILLUSTRATIVE PSC EXAMPLE CALCULATION OF REVENUE SPLITS ( in millions) Oil Gas Revenues 8,508 1,281 % of Revenues 87% 13% Total Profit Oil Revenues Cost Recovery Pool 9,789 60% 40% Recoverable 3,916 Costs Operating Costs…
  11. UNDERSTANDING EGYPT – Apache Corp – slide 11
    ILLUSTRATIVE PSC EXAMPLE APACHE OPERATING RESULTS BEFORE TAX ( in millions) Apache Revenues 3,038 Less: Operating Costs (450) DD&A (925) (1,375) Pre-tax income 1,663 Plus DD&A 925 Operating cash flow 2,588 What about…
  12. UNDERSTANDING EGYPT – Apache Corp – slide 12
    ILLUSTRATIVE EXAMPLE TAX BARRELS HOW DO THEY WORK How do income taxes work in Egypt Apache and EGPC both incur A.R.E. federal income taxes Per the terms of the PSC, EGPC pays Apaches income taxes to the A.R.E on behalf of Apache…
  13. UNDERSTANDING EGYPT – Apache Corp – slide 13
    ILLUSTRATIVE PSC EXAMPLE TAX GROSS-UP IS EARNINGS AND CASH FLOW NEUTRAL What is the accounting bottom line ( in millions) Before Taxes Tax Gross-Up After Taxes Apache Revenues 3,038 + 1,475 = 4,512 Less: Operating Costs (450)…
  14. UNDERSTANDING EGYPT – Apache Corp – slide 14
    EXCERPT FROM APACHE 2012 10-K, F-56 15
  15. UNDERSTANDING EGYPT – Apache Corp – slide 15
    ILLUSTRATIVE PSC EXAMPLE INCOME AND CASH FLOW ARE GREAT, WHAT ABOUT PRODUCTION ( in billions) Oil Gas Total (MBbls) (MMcf) (MBoe) Gross Daily Production 210 900 360 Gross Revenues 8.5 + 1.3 = 9.8 % of Revenues 87% 13% 100%…
  16. UNDERSTANDING EGYPT – Apache Corp – slide 16
    EARNINGS, CASH FLOW AND PRODUCTION1 HISTORICAL PERSPECTIVES Illustrative For The Year Ended December 31 2008 2009 2010 2011 2012 Example Realized Prices Oil (/Bbl) 91.37 61.34 79.45 109.92 110.92 111.00 Gas (/Mcf) 5.25 3.70 3.62…

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