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Apache Corporation Announces Third-Quarter Financial And Operational Results

The following excerpt is from the company's SEC filing.

Reported global production of 542,000 barrels of oil equivalent (boe) per day.

Delivered onshore North American production of 306,000 boe per day and raised 2015 guidance to 307,000 to 309,000 boe per day, a more than 2 percent pro forma increase over 2014.

Achieved international and offshore production growth of 5 percent sequentially, averaging 180,000 boe per day (adjusted for divestitures, Egypt tax barrels and noncontrolling interest), and raised 2015 guidance to 172,000 to 174,000 boe per day, a 10 to 12 percent pro forma increase over 2014.

Realized significant exploration success in th e U.K. North Sea with discoveries representing estimated net reserves of 50 million to more than 70 million boe.

HOUSTON, Nov. 5, 2015 Apache Corporation (NYSE, Nasdaq: APA) today announced a third-quarter 2015 net loss of $5.7 billion, or $14.95 per diluted common share, which includes an after-tax ceiling test write down of $3.7 billion resulting from current low commodity price levels and a $1.5 billion charge related to an increase in the valuation allowance on deferred tax assets. When adjusted for these and certain additional items that impact the comparability of results, Apaches third-quarter net loss totaled $21 million, or $0.05 per share. Net cash provided by continuing operating activities was approximately $835 million and adjusted EBITDA from continuing operations was $830 million.

Apache continues to demonstrate resiliency in todays low commodity price environment, said John J. Christmann, IV, Apaches chief executive officer and president. Our third-quarter production volumes once again exceeded expectations and continue to do so on a significantly lower capital program. This is a testament to the quality of our assets and the efforts of our teams in every region. We have made significant improvements in our capital investment process, and we are relentlessly focused on improving capital efficiency. We are also seeing great progress on our costs, as both operating and G&A are down considerably since the end of last year.

APACHE CORPORATION ANNOUNCES THIRD-QUARTER FINANCIAL AND OPERATIONAL RESULTS

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Debt and liquidity

After paying down $900 million of long-term debt in the third quarter, the company reported debt of $8.8 billion as of Sept. 30, 2015. Apache has no maturities before 2018 and only $700 million of debt maturing before 2021. The company has access to available liquidity of more than $5 billion, including cash on hand and available borrowing capacity under its committed credit facility of $3.5 billion. The credit facility matures in June 2020 and supports a commercial paper program of the same size. Since the end of the third quarter, Apache has signed agreements to sell certain non-upstream assets for cash proceeds of approximately $500 million, further strengthening the companys cash position and financial flexibility.

Capital expenditures and capital guidance update

Apaches financial strength and liquidity are sustained through disciplined capital budgeting. The 2015 capital program has been significantly reduced from 2014 levels. Capital expenditures in the third quarter (excluding leasehold acquisitions, capitalized interest, Egypt noncontrolling interest, and spending on divested LNG and associated assets) were $762 million, down 16 percent from the second quarter. For the first nine months of the year, they totaled $2.9 billion, and the company remains on track to spend within its guidance range.

Third-quarter operational highlights

Apache operated an average of 28 rigs worldwide and drilled 111 gross operated wells, 92 of which were North American onshore. Highlights across Apaches operating regions include:

Permian

Apache operated 10 rigs in the Permian and completed 65 gross operated wells during the third quarter, up from 53 well completions in the second quarter. Production averaged 170,000 boe per day, only 1 percent lower than the second quarter despite significant planned and unplanned facilities downtime.

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Delaware Basin

Apache averaged four rigs and targeted the Bone Spring and Wolfcamp formations in the Pecos Bend and Waha areas. The company completed 22 wells using only one frac crew, and completed well costs continue to decline significantly, now averaging below $5-million.

Midland Basin

Apache averaged three rigs during the quarter, all targeting its southern Midland focus areas in Midland, Upton, Reagan and Glasscock counties. The company completed 25 wells during the quarter and directed its drilling activity primarily to Wolfcamp and Spraberry targets in the Wildfire area of Midland County and in the Powell Miller area of northern Reagan County. Completion costs in the Barnhart area, where 17 wells remain to be completed, have dropped 44 percent to approximately $2.7 million due to a combination of price decreases and significant design changes.

Central Basin Platform/NW Shelf

Apache averaged three rigs during the quarter, two of which were targeting the Yeso formation in its Cedar Lake play in Eddy County, where completed well costs have decreased nearly 50 percent since late 2014. Two notable wells, the Hummingbird #1H and #2H, were drilled and placed on production at average 30-day rates of 816 boe per day and 722 boe per day, respectively. With average completed well costs of only $2.6 million, these wells are expected to deliver very strong rates of return.

Mid-continent (formerly Central)

During the quarter, Apache continued to operate two rigs in the Mid-continent, where it primarily targeted the Woodford/SCOOP and Marmaton plays. The company brought online two notable wells, one each in the Marmaton and Woodford plays. The Apache 21-11-21 targeting the Marmaton produced at an average 30-day rate of 1,686 boe per day, and the Truman 28-6-6 #1H targeting the Woodford produced an average 30-day rate of 1,949 boe per day.

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Gulf Coast (Eagle Ford)

Apache primarily focused on optimizing well completions in Area A of its Eagle Ford position. Eight wells were completed and placed on production during the quarter, with average 30-day rates that are in line with the companys published type curve. Late in the third quarter, after successfully improving the production rates and cost efficiencies in Area A, Apache resumed drilling with one rig.

Canada

The company is primarily focused on advancing its programs in the liquids-rich Duvernay and Montney plays. In the Duvernay, Apache placed its first well pad online in October and achieved strong test results from seven wells that averaged 2,188 boe per day per well. During the upcoming drilling season, Apache is planning to run up to two rigs in the Duvernay and one in the Montney.

Gross production was up 4 percent sequentially on strong drilling results in the Ptah and Berenice oil fields. During the quarter, these fields generated peak production of more than 26,000 boe per day. This performance, coupled with other recent successful exploration and development wells, have enabled the company to exceed its prior peak gross production rate from early 2012. As a result, Apache became the largest oil and natural gas producer in Egypt on a gross operated basis during the third quarter.

Production increased 6 percent, or more than 4,200 boe compared to the second quarter of 2015. The increase was driven by strong contribution from new wells and record third-quarter...


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