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TRANSCRIPT
December 8, 2015
1
FORWARD-LOOKING STATEMENTS
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 and Exchange Act of 1934 including, without limitation, expectations, beliefs, plans and objectives regarding anticipated financial and operating results, asset divestitures, estimated reserves, drilling locations, capital expenditures, price estimates, typical well results and well profiles, type curve, and production and operating expense guidance included in this presentation. Any matters that are not historical facts are forward looking and, accordingly, involve estimates, assumptions, risks and uncertainties, including, without limitation, risks, uncertainties and other factors discussed in our most recently filed Annual Report on Form 10-K, recent Quarterly Reports on Form 10-Q, recent filed Current Reports on Form 8-K available on our website, www.apachecorp.com, and in our other public filings and press releases. These forward-looking statements are based on Apache Corporation’s (Apache) current expectations, estimates and projections about the company, its industry, its management’s beliefs and certain assumptions made by management. No assurance can be given that such expectations, estimates or projections will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this presentation, including, Apache’s ability to meet its production targets, successfully manage its capital expenditures and to complete, test and produce the wells and prospects identified in this presentation; to successfully plan, secure necessary government approvals, finance, build and operate the necessary infrastructure; and to achieve its production and budget expectations on its projects.
Whenever possible, these “forward-looking statements” are identified by words such as “expects,” “believes,” “anticipates,” “projects,”, “guidance” and similar phrases. Because such statements involve risks and uncertainties, Apache’s actual results and performance may differ materially from the results expressed or implied by such forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Unless legally required, we assume no duty to update these statements as of any future date. However, you should review carefully reports and documents that Apache files periodically with the Securities and Exchange Commission.
Cautionary Note to Investors: The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible reserves that meet the SEC's definitions for such terms. Apache may use certain terms in this presentation, such as “resource,” “resource potential,” “net resource potential,” “potential resource,” “resource base,” “identified resources,” “potential net recoverable,” “potential reserves,” “unbooked resources,” “economic resources,” “net resources,” “undeveloped resource,” “net risked resources,” “inventory” and other similar terms that the SEC guidelines strictly prohibit Apache from including in filings with the SEC. Such terms do not take into account the certainty of resource recovery, which is contingent on exploration success, technical improvements in drilling access, commerciality and other factors, and are therefore not indicative of expected future resource recovery and should not be relied upon. Investors are urged to consider carefully the disclosure in Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, available from Apache at www.apachecorp.com or by writing Apache at: 2000 Post Oak Blvd., Suite 100, Houston, Texas 77056 (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC's website at www.sec.gov.
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NORTH SEA EXPLORATION UPDATE
CORY LOEGERING, REGION VP AND MANAGING DIRECTOR – NORTH SEA
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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 structure
International will deliver free cash flow with upside potential
4
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 platform locations
Industry-leading operating costs in North Sea
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~50% OPERATING COST ADVANTAGE
$7.02$8.03
$10.37$11.49
$14.74$16.66
$13.62$13.46 $13.76
$17.64
$22.19
$27.07
$30.49
$0
$5
$10
$15
$20
$25
$30
$35
2009 2010 2011 2012 2013 2014 2015
Apache
UK North Sea Avg
Unit Operating Cost ($/Boe)
Source: Oil and Gas UK 2015 Activity Survey
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Dummy DataInfrastructure12%
Drilling and Completion
78%
MORE FUTURE CAPITAL TOWARDS DRILLING
(1) Excludes acquisitions. (2) Based on Apache mean-risked reserve and capital spending case.
2012 – 2015 Capital(1) 2016 – 2020 Capital(1,2)
Infrastructure44%
Drilling and Completion
51%
Seismic and Exploration
10%
Seismic and Exploration
5%
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Largest oil field in the U.K. North Sea
FORTIES
Acquired in April 2003 from BP for $630 million
Field is one large 4-way structural closure
Apache has invested $2.3 billion in infrastructure and $2.3 billion on drilling and workovers
20 miles
15
mile
s
Forties Field Outline
Apache 3Q’15Net Production
Estimated OOIPTotal Cumulative Gross Production
41,000 Boe/d 5 Billion Boe 2.6 Billion Boe
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Exceptional field revival
FORTIES
Net Proved ReservesYears Until
Decommission Date
97
144
0
50
100
150
200
250
300
350
At Acquisition (2003)
2014
MMBoe
235 MMBoeProduced 2003-2014
0
2
4
6
8
10
12
14
16
18
At Acquisition (2003)
2014
Years
Extended Decommission Date Several
Years
41
45
38
39
40
41
42
43
44
45
46
At Acquisition (2003)
2014
Mboe/d
5+ MBoe/d Added
Net Production
9
16
9
Acquired inventory - 2003
FORTIES
Identified targets
Alpha
Bravo
Charlie
Delta
Echo
FASP
38 targets identified at time of acquisition
10
Substantial low-risk inventory remaining
FORTIES
All targets drilled by Apache
Alpha
Bravo
Charlie
Delta
Echo
FASP
84 targets currently identified
2016 seismic will increase the count
Remaining targets
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Significant reserves remain
FORTIES
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 injection continuously expands the potential location count
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Significant growth potential
BERYL AREA
Acquired in January 2012 from ExxonMobil for $1.44 billion
APA has invested ~$300 million in infrastructure
Exceptional exploration and development success in 2015
3Q 2015 production of ~26,000 Boe/d
Buckland
NevisNess
Skene
Beryl
BDE: 30-Day IP 1071 Boe/d
BCE: 30-Day IP 6916 Boe/d
L4S: 30-Day IP 9679 Boe/d
Corona discovery
ACN: 30-Day IP 9496 Boe/d
K discovery
BLA: 30-Day IP 1670 Boe/d
Beryl Area Recent Well Results
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Acquired targets – 2012
BERYL AREA
Targets at acquisition
Platforms
11 targets at time of acquisition
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New 3D seismic generated 8x inventory increase
BERYL AREA
Remaining targets
Platforms
81 targets remaining
Apache drilled targets
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Substantial reserve upside
BERYL AREA
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
Net Mean Unrisked Reserve (MMBoe)
350 – 600 Net MMBoe
Unrisked net reserve potential
Development
Exploration
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Callater Discovery (Formerly K) – Jurassic
BERYL AREA
Pay proven in 3 fault blocks
One remaining undrilled block to southeast
Over 1,500 feet TVD net pay logged
Initial production in 2017
Net Reserves(1)
Net Unrisked Capital
Oil % / Gas %
25 - 50 MMBoe
$318 million
40% / 60%
>100%
$340 - $680 million
Working Interest 55%
ROR(1)
NPV10(1)
(1) Calculated based on consensus prices as of Nov. 9, 2015, after tax and represents Pmean to P10 estimates.
9/19-18Z
9/19-18
9/19-18X
1 km
Empire State Building
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Tertiary injectite portfolio
BERYL AREA
~100,000 acres covering the Tertiary play
Apache has high working interest across the play
Identified multiple drillable prospects in Beryl Area with 189 –400 MMBoe net unrisked reserves
Corona is Apache’s first injectitediscovery
Next prospect, Titan, is scheduled for 2016
Corona discovery
Titan Prospect
Tertiary Injectite Area
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Corona discovery – tertiary injectite
BERYL AREA
Net Reserves(1)
Net Unrisked Capital
Oil % / Gas %
9 - 19 MMBoe
$308 million
98% / 2%
>100%
$51 - $111 million
Working Interest 100%
10
0 f
eet
gas-oil contact
oil-water contact
225 feet net pay 252 feet net pay
Discovery Appraisal
ROR(1)
NPV10(1)
Identified on new Beryl 3D
APA’s first tertiary well in the Beryl Area
362 foot column height
Excellent reservoir quality
High permeability and porosity
Corona
development acreageexploration acreage
Buckland
Beryl
Skene
(1) Calculated based on consensus prices as of Nov. 9, 2015, after tax and represents Pmean to P10 estimates.
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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
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OTHER HIGH IMPACT EXPLORATION
-
20
40
60
80
100
120
140
160
180
A B C D E F
180 – 410 Net MMBoe
Unrisked net reserve potential
Prospects
Net unrisked MMBoe
Forties
Val D’SereVail
Seagull
Isabella
Komodo
Albion
Pmean values Additional P10 value
21
SEAGULL DISCOVERY
Net Reserves(1)
Net Unrisked Capital
Oil % / Gas %
40 - 60 MMBoe
$360 million
79% / 21%
>100%
$238 - $393 million
Working Interest 35%
ROR(1)
NPV10(1)
672 feet of oil over a 1,092-foot column
Facility constrained flow of 8,700 Bo/d and 16 MMcfp/d
Seagull22/29-2Z22/29-3
22/29-8Y
9.3 km2 Closure
(1) Calculated based on consensus prices as of Nov. 9, 2015, after tax and represents Pmean to P10 estimates.
1,092 ft oil column
22/29-8y
Oil Saturation
Chrysler Building
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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 percentage of capital dollars going toward drilling
APA’s low cost structure and high production efficiency turn marginal economics into high ROR’s
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THANK YOU